Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Fife Electric Power Bill [Lords],

Sidmouth Electricity Bill [Lords],

Wednesbury Corporation Bill [Lords],

Read the Third time, and passed, with Amendments.

Land Drainage (Ouse) Provisional Order Bill,

Ministry of Health Provisional Order (Folkestone Water) Bill,

Read the Third time, and passed.

ABERDEEN CORPORATION ORDER CONFIRMATION BILL,

"to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1899, relating to Aberdeen Corporation," presented by Mr. William Adamson; read the First time; and ordered (under Section 9 of the Act) to be read a Second time upon Friday 11th July, and to be printed. [Bill 223.]

Oral Answers to Questions — UNEMPLOYMENT.

TRAINEES.

Mr. DAY: 1.
asked the Minister of Labour the number of men who have been taught bricklaying at the Birmingham and Dudley training centres during the 12 months ended to the last convenient date; and the amount of wages offered to these men when they have passed through their course?

The MINISTER of LABOUR (Miss Bondfield): During the 12 months ended 31st May, 1930, 206 men passed into employment from the bricklaying classes at the Birmingham and Dudley Centres. Of this number, 137 were placed in employment with builders on the understanding that they would have oppor-
tunity of making further progress in that trade. The remainder were placed in or found employments of other kinds. The commencing wages varied from 10d. to 1s. 3d. an hour.

Mr. DAY: Can my right hon. Friend say why there is such a large discrepancy in the rates of wages?

Miss BONDFIELD: That depends on their experience.

Mr. ALBERY: 4.
asked the Minister of Labour how many unemployed men are at present in training centres, and how many unemployed women are at present in training centres?

Miss BONDFIELD: On 27th June, 4,637 men and 1,047 women were in training at centres administered or financially assisted by my Department.

Mr. ALBERY: Is there any prospect of a large increase of these numbers?

Miss BONDFIELD: Yes, I hope so.

WORKING DAYS LOST.

Sir ASSHETON POWNALL: 2.
asked the Minister of Labour the number of man days estimated to be lost owing to unemployment during the 12 months ending 1st June, 1930; and how it compares with the figures for the preceding 12 months?

Miss BONDFIELD: It is estimated that the total number of days of work, exclusive of Sundays and public holidays, lost through unemployment by insured persons in Great Britain was approximately 424,000,000 in the year ended 26th May, 1930, as compared with 397,000,000 in the previous year.

RE-ENGAGEMENTS.

Mr. ALBERY: 3.
asked the Minister of Labour why instructions have been issued to certain Exchanges not to send the same men back to employers who seek to re-engage men?

Miss BONDFIELD: No such instructions have been issued. If the hon. Member is aware of any cases in which Exchanges have acted in the manner suggested, I should be glad to have particulars.

OLDHAM (EXCHANGE).

Mr. J. WILSON: 7.
asked the Minister of Labour whether she has received re-
presentations regarding the need of a new Employment Exchange in Oldham; and, if so, whether it is proposed to proceed now with the erection of the building?

Miss BONDFIELD: Yes, Sir. Plans of a new building have been prepared and the Office of Works are negotiating for a site. Building operations will be commenced as soon as the necessary preliminary work has been completed.

GLOVE-MAKING INDUSTRY.

Mr. GRANVILLE GIBSON: 9.
asked the Minister of Labour the percentage of unemployment, respectively, in the leather and fabric sections of the glove-making industry?

Miss BONDFIELD: I regret that as "Glove-making" is included in the group "Dress industries not separately specified," separate statistics of the total number of insured persons, and the percentage unemployed in respect of the glove-making industry, are not available.

Mr. GIBSON: Is the right hon. Lady aware that the joint industrial council of the glove-making industry have published figures that it has no unemployed, and that the trade union officials refuse to accept new workers in the industry because they are afraid of unemployment if safeguarding is taken away?

Miss BONDFIELD: I am not aware of that.

Mr. GIBSON: May I send the right hon. Lady the report for 1929?

Miss BONDFIELD: With pleasure.

HYDE (EXCHANGE).

Mr. LAWRIE: 14.
asked the Minister of Labour if her attention has been called to the inconvenience caused by the Employment Exchange at Hyde being in two separate buildings some distance apart; and if, in view of the effect this has upon staff arrangements, she is taking any steps to provide more suitable premises?

Miss BONDFIELD: I am aware of the unsatisfactory accommodation provided for the Hyde Employment Exchange, and steps are being taken to provide a permanent building which will house all classes of applicants. The Office of Works
are in negotiation for a site and plans of a new building have already been approved.

BENEFIT.

Mr. LONGDEN: 10.
asked the Minister of Labour whether any further inquiry has been made into the case of Mr. T. S. Parsons, 1, Belgrave Road, Birmingham, following representations made to her Department on 7th May, regarding the fact that Mr. Parsons, who lays claim to a long period as an insured person and constant worker, always ready, fit, and normally seeking insurable employment, was disallowed benefit under the old Acts latterly, yet is refused benefit by the court of referees under the new Act?

Miss BONDFIELD: Yes, Sir. The case was dealt with by letter to my hon. Friend on 24th June.

Mr. LONDGEN: Will the Minister issue instructions to the local officials in order to make certain that this man will have insurance in accordance with the new Act?

Miss BONDFIELD: My hon. Friend had better give me notice of that question.

Mr. LONGDEN: 11.
asked the Minister of Labour whether her attention has been called to the case of Mr. R. Gold, Moseley Street, Birmingham, who, after serving his country in the Great War, entered industrial employment, became unemployed, was granted benefit under the Act of 1930, but recently was disallowed benefit under the transitional condition (b) of the Act of 1920; and whether she will look into the matter?

Miss BONDFIELD: I am having inquiries made in this case and will let my hon. Friend know the result as soon as possible.

Mr. MATHERS: 18.
asked the Minister of Labour the proportion of the numbers on the registers of the Employment Exchanges whose claims to benefit have been admitted under the new Act, and the corresponding proportion under previous legislation?

Miss BONDFIELD: In the threemonths April to June, 1930, 93.2 per cent. of the persons on the registers had claims to benefit admitted or under consideration. The percentages for the corresponding
periods in the years 1929, 1928 and 1927 were 84.4, 86.9, and 82.8, respectively. I am circulating a table giving further details.

AVERAGE number of PERSONS on the Registers of Employment Exchanges in Great Britain and the numbers and percentages represented by persons with claims to benefit admitted and under consideration.


April to June, 1927 to 1930.


Period.
Average number of persons on the Registers.
Average number of claims admitted or under consideration.
Column 3 as a percentage of column 2.


1.
2
3.
4.


April—June, 1930
…
…
1,761,260
1,642,611
93.2


1929
…
…
1,130,270
953,558
84.4


1928
…
…
1,118,625
972,083
86.9


1927
…
…
1,003,427
831,135
82.8

Mr. STEPHEN: 21.
asked the Minister of Labour what steps she proposes to take to make provision for applicants for unemployment benefit whose claims have been refused on the ground that they are not normally in insurable employment?

Miss BONDFIELD: The conditions under which unemployment benefit may be paid are laid down by Statute, and I have no power to make payments in cases in which these conditions are not satisfied.

Mr. STEPHEN: Is the Minister aware that very large numbers are being turned down as not being normally in insurable employment in Glasgow and other industrial centres, and is she not prepared, either by regulations or the prescribing of the evidence, to do something which will enable the people to get the benefit they ought to get?

Miss BONDFIELD: I have made it clear to the House on many occasions, and there is a question on the Order Paper on the subject.

Mr. MACLEAN: Is the right hon. Lady aware that "not normally insurable" is a phrase only operative under the transitional conditions, and that the courts of referees are bringing it under the statutory conditions, and enforcing it as one of the statutory conditions and not as a transitional condition? That is where the error takes place, and will the right hon. Lady put it right?

Mr. MATHERS: Does the Minister realise that the numbers she has given will cause very serious difficulty to critics of the Government outside this House?

Following is the table:

Mr. STEPHEN: 22.
asked the Minister of Labour the number of men and women who are estimated to have received unemployment benefit owing to the abolition of the not-genuinely-seeking-work condition; and the number of men and women who have been refused benefit since the coming into operation of the new Act on the ground that they do not satisfy transitional condition (a) of the Act?

Miss BONDFIELD: The number of persons estimated to have been brought on to benefit owing to the combined effect of all the changes made by the recent Act is about 170,000; I cannot give separate figures for the change involved by the abolition of the "genuinely-seeking-work" condition, or other amendments taken separately. During the period 13th March to 9th June, 1930, the claims of 4,684 men and 1,499 women were disallowed by courts of referees on the ground that the applicants had not paid eight contributions in the previous two years, or 30 at any time.

Mr. BUCHANAN: 23.
asked the Minister of Labour the latest figures for claims either newly made or reviewed at each of the Glasgow Exchanges, and the number in each refused as not being normally in insurable employment?

Miss BONDFIELD: I will circulate in the OFFICIAL REPORT a statement giving the information desired.

Following is the statement:


CLAIMS to BENEFIT made, and Claims to Benefit Disallowed, on certain grounds in the Glasgow area.


Employment Exchange Area.
Total number of fresh and renewal claims made: 13th May, 1930, to 9th June, 1930.
Number of claims disallowed between 13th May and 9th June, 1930, by Courts of Referees.


Less than 8 contributions in previous two years or 30 at any time.
Not normally insurable.
Total.


Glasgow Central
…
2,562

30
111
141


Glasgow South Side
…
4,855
6,628
13
261
274


Rutherglen
…
889


Cambuslaug
…
884


Bridgeton
…
4,696

31
515
546


Finnieston
…
1,741

—
109
109


Govan
…
3,467

2
66
68


Kinning Park
…
1,553

2
36
38


Maryhill
…
1,966

12
198
210


Parkhead
…
2,977

—
163
163


Partick
…
2,408

2
115
117


Springburn
…
2,626
2,927
29
101
130


Kirkiutilloch
…
301


Total
…
30,925

121
1,675
1,796

Mr. BUCHANAN: 24.
asked the Minister of Labour the reason why the number of persons refused benefit as not being normally in insurable employment has increased by such a large number under the recent Act, seeing that this Section of the Act has not been altered from past Acts?

Miss BONDFIELD: I would refer my hon. Friend to my reply given on 3rd June to a similar question by the hon. Member for the Camlachie Division (Mr. Stephen).

Mr. BUCHANAN: Is the Minister aware that in that answer she gave us no reason why the numbers are so abnormally increased as compared with the numbers under the previous Acts, although the Statute remains the same? Will the right hon. Lady not consider giving the reason, and if she cannot give it in detail in reply to a question, will she consider issuing some form of statement explaining the exact position?

Miss BONDFIELD: I will certainly do my best; I have been doing my best to explain the exact reason.

Mr. BUCHANAN: But in view of the widespread concern in all quarters, will the right hon. Lady not consider issuing some statement as to the reasons why this is happening?

Mr. MACLEAN: Will the right hon. Lady take into consideration the fact, which I mentioned in my previous supplementary question, that the courts of referees are enforcing as a Statutory condition what actually appears in the Act only as a transitional condition, and will she draw the attention of the courts of referees to the fact that they are not administering the Act?

Miss BONDFIELD: I will consider what the hon. Member has said, and if there is any information which I can give on that point, I will certainly give it.

Mr. BUCHANAN: 25.
asked the Minister of Labour if she has made any inquiry into the decisions made by courts of referees which are at variance with the umpire's decision on a person not being normally in insurable employment; if she is satisfied with the present position; and if she proposes any alteration in the procedure in these cases?

Miss BONDFIELD: As my hon. Friend knows, the procedure for deciding claims to benefit is fixed by Statute. I have no power to inquire into decisions given by courts of referees and if I were to do so I should be attempting to re-introduce the system of Ministerial discretion which formerly existed and which Parliament abolished. The procedure generally as
set up by the recent Act will no doubt need to be reviewed in due course, but it would be premature to do so yet as it has only been working since last March.

Mr. BUCHANAN: But does the right hon. Lady take any steps to see that where the decisions of courts of referees are at variance with the umpire's decisions, which are the law on this subject, that the umpire's decision is carried out? Is no action taken by her or her insurance officer acting on her behalf?

Miss BONDFIELD: If the hon. Member means to ask whether I follow the umpire's decisions and ascertain whether these are, in fact, disregarded, certainly I do. It is the duty then of the insurance officer to direct the attention of the court to the umpire's decision.

Mr. BUCHANAN: When courts of referees act in variance with the umpire's decision, does she or her insurance officer take any steps to see that these cases are submitted to the umpire for his decision?

Miss BONDFIELD: That would depend very largely on the nature of the case. If it is a point of law, I think we should have the power; we should probably normally draw the attention of the court to the fact that it is in contradistinction to the umpire's decision; but if, as so often happens, it is a matter of local evidence, then the position is entirely different, and I have no right whatever to intervene or even to challenge the decision.

Mr. MACLEAN: rose
——

Mr. SPEAKER: We must get on to other questions.

Mr. BUCHANAN: I beg to give notice that as soon as possible I intend to raise this question in the House.

AGRICULTURAL WORKERS (INSURANCE).

Mr. SINKINSON: 16.
asked the Minister of Labour if legislation will be forthcoming in the near future providing unemployment benefits to the people in the agricultural industry?

Miss BONDFIELD: I am afraid there is no possibility of legislation this Session on this subject.

FISHING INDUSTRY (INSURANCE).

Mr. SINKINSON: 17.
asked the Minister of Labour if legislation is contemplated to provide unemployment benefits to the people in the fishing industry?

Miss BONDFIELD: Persons employed in the fishing industry are ordinarily insurable against unemployment, and therefore eligible for benefit subject to the usual conditions, unless they are members of the crew of a fishing vessel who are wholly remunerated by a share in the profits or the gross earnings of the working of the vessel. I cannot at present give any undertaking to introduce legislation dealing with this excepted class.

Mr. ALPASS: When the matter of extending the scope of Unemployment Insurance benefit is under consideration, will the right hon. Lady favourably consider this, because it is a matter of grave concern?

Miss BONDFIELD: The question of the share fishermen has been considered by every Minister in turn, and there are very grave administrative difficulties, but I will consider it.

Major McKENZIE WOOD: Is there any evidence that the share fishermen desire this?

Miss BONDFIELD: They desired to contract out when the Act was first passed, but I think that their opinion has slightly changed.

TYNE (SHIPBUILDING CONTRACT).

Sir NICHOLAS GRATTAN-DOYLE: 28.
asked the Mister of Labour whether, in view of the state of unemployment in Newcastle, the Government are taking any steps to induce the Cunard Company to give preference to the Tyne in giving the order for the new Cunarder?

Miss BONDFIELD: No, Sir. I am afraid this is not possible.

Sir N. GRATTAN-DOYLE: Can the Minister say whether the Government have taken any steps with regard to contracts going to the Tyne?

Miss BONDFIELD: It is not the function of the Government to intervene on the question of where contracts are to be placed. It is, however, our function, and we believe it is successfully dis-
charged, to assist in securing work wherever any assistance can be given.

Sir N. GRATTAN-DOYLE: May I ask the right hon. Lady, with regard to a statement which has been published that she informed the hon. Member for West Newcastle (Mr. Palin) that while she could not make a definite promise, there was a good prospect——

Mr. SPEAKER: We cannot pursue this subject.

Sir N. GRATTAN-DOYLE: I beg to give notice that at the earliest opportunity I will raise this question on the Adjournment.

ALIEN DIAMOND WORKERS.

Sir COOPER RAWSON: 30.
asked the Minister of Labour how many foreign diamond workers have been allowed to take up employment in England since 1st January last, and for what periods?

Miss BONDFIELD: No alien diamond workers have been given permission to take up employment here this year.

Sir C. RAWSON: If I give the Minister some information which points to the contrary, will she go into the matter?

Miss BONDFIELD: Certainly, I shall be very glad to have it.

SUGGESTED WORLD CONFERENCE.

Mr. FREEMAN: 45.
asked the Prime Minister whether he has had under consideration the proposal of Mr. Albert Thomas, director of the International Labour Office of the League of Nations, to hold a special world conference to deal with the problem of unemployment; and what action, if any, he intends to take in the matter?

The PRIME MINISTER (Mr. Ramsay MacDonald): I understand that suggestions to this effect were mentioned by the director in the course of a speech surveying the work of the office, but so far as I am aware no specific proposal on the subject has been made by him.

Mr. FREEMAN: Will the Prime Minister consider the desirability of himself taking action along these lines and calling such a world conference?

The PRIME MINISTER: At the moment I cannot see any really effective result from it. That is according to my present information.

Captain CROOKSHANK: Would it not be more to the point if the Prime Minister did something about unemployment in this country first?

EMERGENCY LEGISLATION.

Sir KINGSLEY WOOD: 46.
asked the Prime Minister if he proposes to ask the House to consider any emergency legislation relating to unemployment before the Summer Recess?

Sir N. GRATTAN-DOYLE: 49.
asked the Prime Minister whether he is now in a position to state if any emergency legislation will be required this Session in connection with the plans of the Government for the relief of unemployment?

The PRIME MINISTER: Yes. I hope the Bill will be put down for Second Reading at an early date, probably next week.

Sir K. WOOD: Has the permission of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) been obtained?

Sir N. GRATTAN-DOYLE: When does the right hon. Gentleman intend to begin to implement the promises which he gave at the General Election?

Dr. VERNON DAVIES: Is the statement correct that this emergency legislation for unemployment will necessitate the House sitting into the second or third week in August?

RELIEF SCHEMES (GRANTS).

Sir N. GRATTAN-DOYLE: 60.
asked the Minister of Health whether he will lay upon the Table of the House the statements given to the representatives of local authorities outlining the proposals of the Government in respect of grants towards the cost of employment schemes?

The MINISTER of HEALTH (Mr. Arthur Greenwood): The Command Paper containing the statements in question will be issued to-morrow.

POOR LAW RELIEF, GLASGOW.

Mr. STEPHEN: 75.
asked the Secretary of State for Scotland the number of men and women in receipt of able-bodied relief in Glasgow and Govan parish for each week since the coming into operation of the new Unemployment Insurance Act to the latest available date?

The SECRETARY of STATE for SCOTLAND (Mr. William Adamson): Only monthly figures are available and, with my hon. Friend's permission, I propose to circulate it the OFFICIAL RETORT a statement giving the particulars for the months of March, April and May last.

Mr. STEPHEN: Will the statement show whether it is the case that within the last month there has been a very large increase in the number of those obtaining able-bodied relief, and can the right hon. Gentleman tell us the reason for that?

Persons in receipt of able-bodied relief.


Parish.
15th March, 1930.
15th April, 1930.
15th May, 1930.



Males.
Females.
Dependants.
Males.
Females.
Dependants.
Males.
Females.
Dependants.


Glasgow
…
6,330
496
15,222
3,317
291
8,194
2,323
268
5,288


Govan
…
4,263
429
9,778
1,898
323
4,212
3,828
321
12,774


Note.—The Govan figures for May, 1930, are affected by the relief now granted to children of persons in receipt of Unemployment Benefit. Additional reliefs of 1s. 6d. per week in respect of each dependant child have brought on to the Poor Roll in Govan persons with dependant children who applied for supplementation of the Unemployment Benefit scale. In such cases although the payment is only given in respect of the dependant children, the man, wife and children are included in the figures.

DOMESTIC SERVANTS.

Mr. MANDER: 5.
asked the Minister of Labour if she is now in a position to state the policy of the Government with regard to the position of domestic servants?

Miss BONDFIELD: I have nothing to add at present to the replies which I have already given to the hon. Member and others on this subject.

Mr. MANDER: I beg to give notice that at an early date I will call attention to the matter on the Adjournment.

STATISTICS.

Sir A. POWNALL (for Sir ARTHUR STEEL-MAITLAND): 6.
asked the Minister of Labour into how many trades the insured occupations are subdivided by the Ministry of Labour for the purpose of their monthly analysis of employment; in how many trades is there a decrease of unemployment in the latest figures as compared with the corresponding period for last year; and in how many has there been an increase?

Mr. ADAMSON: I am aware of that fact, and deal with it in my reply to the question.

Mr. STEPHEN: Am I to understand from the right hon. Gentleman that in the reply he explains why there is this large increase, and if it is due to the fact that so many people are not getting unemployment insurance benefit?

Mr. ADAMSON: I have already explained that I have dealt with the matter in my reply.

Following is the statement:

Miss BONDFIELD: For the purpose of statistics of employment and unemployment, industry is divided into 100 groups. In two of these groups the figures for 26th May, 1930, showed a decrease as compared with the corresponding date last year in the numbers and percentages of insured persons unemployed.

Sir A. POWNALL: In how many an increase?

Miss BONDFIELD: Ninety-eight.

MAINTENANCE ALLOWANCE.

Major COLVILLE (for Captain GUNSTON): 29.
asked the Minister of Labour if she is aware that the maintenance allowance paid to Mr. Worlock, of Kingswood, near Bristol, on account of his housekeeper, has now been stopped on the ground that Mr. Worlock's son is now aged 20; that the son is suffering from arrested growth and has remained a child all his life, and that the case is incurable and the child must have attention day and night; and will she reconsider the case?

Miss BONDFIELD: The conditions under which these allowances may be given are fixed by Statute and are not within my control. The case referred to was submitted to the Umpire, and I am sending the hon. and gallant Member a copy of his decision.

Oral Answers to Questions — INDUSTRIAL DISPUTES.

Mr. ISAACS: 12.
asked the Minister of Labour the number of days' work that have been lost as a result of industrial disputes during the year 1929 on account of claims for wages increases, wages decreases and other causes, respectively?

Miss BONDFIELD: Out of 8,287,000 working days lost owing to trade disputes in 1929, 619,000 were due to claims for wage increases, 7,284,000 to claims for wage decreases, and 384,000 to other causes.

Oral Answers to Questions — FORCED LABOUR (DRAFT CONVENTION).

Mr. ORMSBY-GORE: 13.
asked the Minister of Labour what were the reasons why the British Government declined to support the proposed draft convention on forced labour at the recent International Labour Office Conference at Geneva; what other Governments adopted the same attitude; and whether any idea of such a convention now falls to the ground?

Miss BONDFIELD: I think the right hon. Member is under some misapprehension. The British Government representative supported and voted for this draft convention, which was carried by 93 votes for and none against.

Mr. ORMSBY-GORE: Do I understand, then, that the French and Portuguese Governments are adhering to the convention?

Miss BONDFIELD: Three of them abstained.

Oral Answers to Questions — ICE CREAM VENDORS (HOURS OF WORK).

Mr. ALPASS: 20.
asked the Minister of Labour whether she is aware that the purveyors of ice cream from tricycle carriers have to work very long hours, seven days a week with no half-holidays,
for scant remuneration; and whether she will consider bringing these workers within the scope of trade boards for the catering trade at as early a date as possible?

Miss BONDFIELD: I am considering this matter in connection with the general question of applying the Trade Boards Acts to the catering trade.

Oral Answers to Questions — DISMISSED RUSSIAN EMPLOYES, GREAT BRITAIN.

Sir A. POWNALL: 31.
asked the Secretary of State for the Home Department if he can now say what decision has been arrived at with regard to the continued stay in this country of certain former employés of Soviet organisations in this country?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Clynes): I made a full statement on this subject in the course of the debate on the Home Office Vote on 7th May last. As a result of my subsequent inquiries I have not found any grounds for requiring the remainder of the aliens concerned to leave the country.

Sir A. POWNALL: Can the right hon. Gentleman say how many aliens this affects?

Mr. CLYNES: I think the number I gave in the course of the debate was "about 27," but there has since been a reduction.

Oral Answers to Questions — ISADORE DREAZON.

Sir K. WOOD: 32.
asked the Home Secretary whether his inquiries are now completed concerning the case of Isadore Dreazon, recently convicted at Manchester; whether he can state the various industrial disputes in which it has been ascertained that Dreazon intervened or which he fomented; and whether it has now been ascertained if he is a member of the executive of the Third International?

Mr. CLYNES: As I informed the House on the 22nd May last, this man carried an American passport on his arrival in this country. There is reason to think that he was not entitled to the possession of that passport, and I am
awaiting the result of inquiries as to his identity. Meanwhile, it would not be in the public interest to make any further statement.

Sir K. WOOD: Is there any objection to answering the last part of the question, as to whether it has now been ascertained if he is a member of the executive of the Third International?

Mr. CLYNES: Inquiries into that matter are still proceeding.

Mr. STEPHEN: Has it been ascertained whether he is a member of the Empire Free Trade party?

Oral Answers to Questions — GREYHOUND RACECOURSES.

Mr. MUGGERIDGE: 33.
asked the Home Secretary whether he will initiate legislation enabling local authorities to intervene in cases where the establishment of a greyhound racecourse creates a public nuisance?

Mr. CLYNES: Local authorities already have certain powers in connection with town planning. I cannot undertake to intiate legislation as suggested, but any legislation introduced would, of course, be carefully considered by the Departments concerned.

Mr. MUGGERIDGE: Is the right hon. Gentleman aware that in Romford, where there is no town planning, a syndicate is forcing one of these racecourses on the town, to the disadvantage of the whole of the inhabitants, and that we have no means of dealing with the point?

Mr. CLYNES: That point is in no way covered by Home Office authority; but on the general question I have caused a long letter to be sent to my hon. Friend, and he will find in it some supplementary information.

Oral Answers to Questions — MR. TROTSKY.

Miss WILKINSON: 34.
asked the Home Secretary whether he is prepared to reconsider his refusal to grant a visa to visit this country for medical and personal reasons to Mr. Leon Trotsky?

Mr. CLYNES: I have already fully informed the House of the reasons why His Majesty's Government decided to re-
fuse facilities for Mr. Trotsky's proposed visit, and I regret that I am not prepared to reconsider that decision.

Miss WILKINSON: Would it not be wise to reconsider the decision in view of the serious uneasiness that has been caused among liberal and enlightened movements in Eastern Europe by the Government's hospitality to Count Bethlen?

Mr. BUCHANAN: Will the right hon. Gentleman apply the same law to the King of Spain as he has done to this gentleman?

Oral Answers to Questions — TRANSPORT.

MOTOR ACCIDENTS, WEEK-ENDS.

Mr. ALBERY: 35.
asked the Home Secretary whether his attention has been called to the increasing number of motor accidents, fatal and otherwise, during week-ends; and whether, in conjunction with the Minister of Transport, he proposes to take any steps to deal with this matter?

Mr. CLYNES: I am aware of the increase in number of such accidents and the police and traffic authorities are giving constant attention to possible measures for dealing with the position. My hon. Friend the Minister of Transport will be able to investigate and analyse the causes of such accidents under the powers proposed to be conferred on him by the Road Traffic Bill.

Mr. ALBERY: Apart from any fresh legislation, does not the right hon. Gentleman think that something might be achieved by a greater measure of control in co-operation with local authorities and associations during the crowded period of the year?

Mr. SPEAKER: It is no good asking Ministers for their opinions at Question time.

Mr. ALBERY: May I ask the right hon. Gentleman whether he will consider taking action along the lines indicated?

Mr. CLYNES: I can only that the greatest vigilance is exercised. This is a matter of life and death, and we continually appeal to all to exercise the greatest care to avoid accidents.

TRACKLESS TROLLEYS (LONDON AREA).

Sir JOSEPH LAMB: 78.
asked the Minister of Transport whether he has obtained a report from the London Traffic Advisory Committee upon the introduction of trackless trolleys into the London traffic area; and, if not, whether he will obtain such a report and circulate it so that, if possible, it may be available before the London United Tramways Bill is submitted for Second Reading?

The MINISTER of TRANSPORT (Mr. Herbert Morrison): The London United Tramways Bill, in so far as it proposes the introduction of trackless trolley vehicles in the London traffic area, has been considered by the London Traffic Advisory Committee, from whom I have obtained a report. It is not the practice to publish reports made to me by the Advisory Committee on Private Bills, but, after considering the Committee's observations, I prepared a report for the Committees of both Houses dealing with this Bill.

Sir J. LAMB: When will that report be available?

Mr. MORRISON: The report is now before the other House, and it will no doubt come before this House when the Bill is before it. If the hon. Member would like a copy of it, I shall be happy to send him one at once.

Sir J. LAMB: Thank you.

REGENT'S PARE.

Sir CYRIL COBB: 80.
asked the First Commissioner of Works whether he can furnish any statistics of the number of vehicles using the Outer Circle of Regent's Park as a relief road to the Marylebone Road?

The FIRST COMMISSIONER of WORKS (Mr. Lansbury): I am informed that no census of vehicles using this road has been taken by the police.

Sir C. COBB: 81.
asked the First Commissioner of Works whether, in view of the added attractions of Regent's Park, especially those lately devised for children, he will consider the advisability of making the necessary Regulation for safeguarding the public from the ever-increasing traffic dangers prevailing in connection with all the approaches to the park from the Outer Circle, either by the
appointment of additional attendants or the institution of a speed limit of 12 miles an hour, as in Battersea Park?

Mr. LANSBURY: The regulation of the traffic in the Outer Circle is generally in the hands of the police. My Department employs park-keepers at nearly all the principal entrances to the park, who assist pedestrians in crossing the road. I am considering whether any further assistance of this kind is needed. A fresh Regulation has recently been allowed by Parliament imposing a limit of 20 miles an hour for the Royal Parks. This I consider a more reasonable limit of speed for these roads than that suggested by the hon. Member.

Sir C. COBB: 82.
asked the First Commissioner of Works whether, in view of the widening of the Marylebone Road and Park Road, it is any longer necessary for the Outer Circle of Regent's Park to be used as a relief road to those thoroughfares; and whether he will consider the possibility of reverting to the traffic regulations which formerly existed within the area of the park?

Mr. LANSBURY: I consider that it would be inconvenient to the public to exclude from the Outer Circle traffic which has been using it for very many years. As to the latter part of the question, I know of no alteration which has been made unless it be the withdrawal some 10 years ago of the speed limit of 12 miles an hour, which it was found, in practice, impossible to enforce.

Oral Answers to Questions — FACTORY INSPECTORATE.

Mr. GRAHAM WHITE: 36.
asked the Home Secretary if it is his intention to carry out the recommendations of the Departmental Committee for the reorganisation and increase of the factory inspectorate?

Mr. CLYNES: Yes, Sir, the recommendations of the Committee have been generally approved and have been, or are in the course of being, carried out. Particulars of the changes decided upon were announced in the Press on 6th March last, and I will forward to the hon. Member a copy of the notice.

Mr. GRAHAM WHITE: 37.
asked the Home Secretary the number of new factories which have come under the
factory inspectorate in the Midlands and the South, respectively, in the last five years?

Mr. CLYNES: The Midlands and the South are divided up for purposes of factory inspection into several divisions, and I will circulate with the OFFICIAL REPORT a table which will show the increase in the number of factories during the last five years in each of the divisions

Number of Registered Factories in Midland, Eastern, South Eastern, Southern and Western Divisions at end of 1924 and 1929.


Division.
Number of Registered Factories.



At end of 1924.
At end of 1929.
Increase.


Midland (a)
14,975
15,329
354


Eastern (b)
12,472
12,877
405


South Eastern (c)
17,843
20,974
3,131


Southern (d)
16,900
19,421
2,521


Western (excluding Wales and Monmouthshire) (e).
8,492
9,066
574


(a)Counties of Warwick, Worcester, Stafford and Shropshire.


(b)Counties of Nottingham, Leicester, Rutland, Lincoln, Norfolk, Cambridge, Huntingdon, Northampton and Bedford; parts of the Counties of Buckingham, Hertford and Suffolk.


(c) Counties of Essex, Kent and Sussex; parts of the Counties of London, Surrey and Suffolk.


(d) Counties of Middlesex, Berkshire, Oxford, Hampshire; parts of the Counties of London, Hertford, Buckingham, Surrey and Dorset.


(e) Counties of Gloucester, Somerset, Wiltshire, Devon and Cornwall; part of the County of Dorset.

Oral Answers to Questions — EDUCATION.

MEDICAL EXAMINATION (CYRIL FORD).

Mr. FREEMAN: 39.
asked the President of the Board of Education whether his attention has been called to the case of Cyril Ford, aged 12, Raglan Road, Broad Street School, Bromley, Kent, who was forcibly given treatment to his eyes in May, 1930, by the representative of the school medical officer without the consent of his parents; and under what authority was this treatment given?

The PRESIDENT of the BOARD of EDUCATION (Sir Charles Trevelyan): I am informed that this boy was found at medical inspection to be suffering from a severe defect of the eyes and that he subsequently, with the full knowledge of his parents, attended the school clinic for a more thorough examination. Drops were put in the boy's eyes in the usual way to make the examination possible, but no treatment was given. The parents were then advised that the boy needed

concerned. I hope this will give the hon. Member the information he desires.

Captain CAZALET: Can the right hon. Gentleman say whether the Government contemplate bringing in a factory Bill next Session?

Mr. CLYNES: I have already answered questions on that matter. I am hopeful that the hon. and gallant Member will find the Bill in the list next Session.

Following is the table:

spectacles, but they refused to allow spectacles to be provided. In the last resort the National Society for the Prevention of Cruelty to Children initiated police court proceedings, which resulted in the imposition of a fine for neglect.

MAINTENANCE ALLOWANCE.

Lieut.-Commander KENWORTHY: 40.
asked the President of the Board of Education what is his estimate of the annual cost of maintenance allowances on the proposed scale payable to parents of children in the last year after the anticipated raising of the school-leaving age, but without any means tests for working-class parents as defined in the Housing of the Working Classes Acts?

Sir C. TREVELYAN: I have been unable to obtain any data on which to base a reliable estimate of the proportion of parents who belong to the working classes as defined in the Housing Act, 1925, and I am, therefore, unable to give any estimate of the cost of awarding
maintenance allowance to the children of such parents without a means test. The annual cost of awarding maintenance allowances to all the children in the schools, aged 14 to 15, at five shillings a week, without any means test, would amount to about £5,000,000 in the first full year after raising the leaving age.

Sir K. WOOD: Could not the right hon. Gentleman give some short account of the happy gathering which he addressed yesterday on this matter?

Lieut.-Commander KENWORTHY: Do I understand that the Minister of Education was at a Conservative meeting?

Mr. ARNOTT: 43.
asked the President of the Board of Education the estimated annual cost of providing maintenance allowances of 5s. per week for children between 14 and 15 years of age in attendance at secondary schools whose parents are exempted from Income Tax?

Sir C. TREVELYAN: The Board's records do not include particulars of the numbers of children in secondary schools classified so as to show whether their parents are exempted from Income Tax, and I am, therefore, unable to give the estimate for which my hon. Friend asks.

SECONDARY EDUCATION (FEES).

Mr. ARNOTT: 42.
asked the President of the Board of Education the estimated annual cost to the Board and the local authorities, respectively, of providing the existing facilities for secondary education free up to the age of 16, and up to the age of 18 years?

Sir C. TREVELYAN: If the amount now paid by parents and guardians in secondary school tuition fees were to be replaced from public funds, the estimated annual cost would be about £2,500,000 in respect of pupils up to the age of 16, or about £2,800,000 in respect of pupils up to the age of 18. In view of the different methods in which secondary schools receive assistance from public funds, it is not practicable to state how this cost would be shared between the Board of Education and the local authorities.

PROVIDED SCHOOLS.

Lieut.-Commander KENWORTHY: 44.
asked the President of the Board of
Education whether he is continuing his negotiations with those interested in the non-provided schools over the new educational proposals?

Sir C. TREVELYAN: In view of the favourable reception in most quarters of the proposals to deal with voluntary schools, I intend, in the interval before the next Session, to renew the discussions in order to ascertain whether any larger measure of agreement is possible, consistently with maintaining the cardinal features of the suggested arrangement.

Oral Answers to Questions — HOUSE OF COMMONS (SITTINGS).

Mr. CHARLES WILLIAMS: 47.
asked the Prime Minister if he is yet in the position to announce the decision of the Government on the recommendation of the Select Committee on the Hours of Sittings of the House that the House should sit and rise one hour earlier on Fridays?

The PRIME MINISTER: This suggestion will receive consideration when the wider inquiry, to which I referred on Monday last in reply to questions by the hon. Members for Newcastle North (Sir N. Grattan-Doyle) and Hulme (Mr. McElwee) has been completed.

Mr. WILLIAMS: As all the evidence was practically unanimous, could not the Prime Minister separate this point from the rest, and try it as an experiment at the beginning of the Autumn Session; and is he further aware of the great convenience it would be to the country Members of all parties?

The PRIME MINISTER: That point is under consideration, but it is very difficult to separate the two. If we receive any sort of representative opinion from hon. Members, I see no difficulty at all in trying it as an experiment when we meet in the Autumn.

Mr. WILLIAMS: Would the right hon. Gentleman be prepared to go into this matter through the usual party channels to see whether the convenience of the House would not be served?

The PRIME MINISTER: indicated assent.

Mr. MACLEAN: Will the Prime Minister find out from the hon. Member
who has asked the question if he is as anxious for a reduction in the miners' hours of work?

Oral Answers to Questions — HOUSE OF LORDS (PEERESSES).

Mr. MANDER: 48.
asked the Prime Minister if it is the intention of the Government during the present Parliament to introduce legislation making peeresses eligible to sit in the House of Lords?

The PRIME MINISTER: This question has not been considered by the Government.

Mr. MANDER: Can the Prime Minister say whether it is not possible to deal with this matter by means other than legislation?

Oral Answers to Questions — CO-OPERATIVE DIVIDENDS.

Sir K. WOOD: 50.
asked the Minister of Health whether he has received a copy of the resolution passed at the recent Co-operative Congress regretting his failure to remedy the position that has arisen in connection with co-operative dividends on out-relief vouchers; and if he is taking any action in the matter?

Mr. GREENWOOD: I have not received such a resolution, and, as regards the second part of the question, I would refer the right hon. Gentleman to my reply to him of the 15th May.

Sir K. WOOD: Does not the right hon. Gentleman remember all his statements on this matter, and has he not suffered from a complete loss of memory during the last 12 months?

Mr. GREENWOOD: Not nearly so much as in the case of the right hon. Gentleman.

Mr. DAY: Will the Minister of Health ask the right hon. Gentleman who put that question to send him a copy of the resolution?

Oral Answers to Questions — ASYLUM OFFICERS' SUPERANNUATION ACT, 1909.

Mr. RAMSBOTHAM: 52.
asked the Minister of Health whether he proposes to amend the Asylum Officers' Superannuation Act, 1909; and, if so, whether
he can give any idea of the additional cost which will be incurred by such proposals?

Mr. GREENWOOD: An actuarial investigation of the position under the Asylum Officers' Superannuation Act, 1909, is being made by the Government Actuary, and pending the result of it I am not in a position to make any statement.

Mr. RAMSBOTHAM: Is the right hon. Gentleman not aware that he gave much the same information about two months ago, when he stated that he would expedite the report?

Mr. GREENWOOD: That is quite true, but this is a very elaborate investigation, and it is bound to take some time even with the greatest possible expedition.

Oral Answers to Questions — NATIONAL HEALTH INSURANCE.

VOLUNTARY CONTRIBUTORS.

Mr. MANSFIELD: 53.
asked the Minister of Health if he will consider the question of introducing legislation for the purpose of making provision for persons who were insured workers, and who became exempt from insurance for various reasons, to enable them to re-enter insurance and thus qualify for pension and other benefits?

Mr. GREENWOOD: Provision is already made in the National Health Insurance Acts whereby persons who cease for any reason to be insurably employed may elect to become voluntary contributors for health and pensions insurance purposes within a certain time after so ceasing to be employed. Moreover, under the Contributory Pensions Act, 1925, persons who had ceased to be insured persons before that Act came into force were given the opportunity of becoming voluntary contributors in order to qualify for pensions and health insurance benefits.

SICKNESS AND DISABLEMENT CLAIMS.

Dr. MORRIS-JONES: 58.
asked the Minister of Health whether the committee of investigation into the causes of the increased sickness and disablement claims amongst insured persons has completed its deliberations?

Mr. GREENWOOD: No, Sir. The committee is still actively engaged in its investigation of the problem.

Dr. MORRIS-JONES: When does the right hon. Gentleman anticipate that he will receive its finding?

Mr. GREENWOOD: When the question was raised on the Vote, I explained that it would mean investigating a very large number of recent claims, and would undoubtedly take some time.

Dr. MORRIS-JONES: Will the right hon. Gentleman submit the findings of the Committee to the House?

Mr. GREENWOOD: I will see that they are in some way communicated, but I cannot undertake, before I see the report, to say whether it will be published.

Oral Answers to Questions — PUBLIC HEALTH.

MENTAL CASE, HANWELL.

Mr. RICHARDSON: 55.
asked the Minister of Health if he will cause inquiry to be made into the case of Mrs. Margaret Webster, whose husband and five children live at Woolwich, who was transferred from Hanwell to Abergavenny mental hospital on 18th December, 1929?

Mr. GREENWOOD: I will make inquiries and communicate with my hon. Friend in regard to this case.

RHEUMATISM.

Mr. GRAHAM WHITE: 57.
asked the Minister of Health if he has any information as to the progress made at the clinic for the treatment of rheumatism established by the British Red Cross Society?

Mr. GREENWOOD: I am following the progress of this clinic with interest. I understand that it is now open for the treatment of all forms of chronic rheumatic diseases, and that there is an increasing attendance of patients.

X-RAY APPARATUS (HOSPITALS).

Dr. MORRIS-JONES: 59.
asked the Minister of Health whether any publicly controlled hospitals in this country utilise X-ray apparatus not of British manufacture?

Mr. GREENWOOD: The information in my possession is not sufficient to enable me to answer this question.

Mr. LEIF JONES: Can the right hon. Gentleman give the assurance that patients in the hospitals get the advantage of the best possible X-ray apparatus, irrespective of where it is manufactured?

Mr. GREENWOOD: I should hope that that is so.

Oral Answers to Questions — OLD AGE PENSIONS.

Colonel HOWARD-BURY: 56.
asked the Minister of Health whether he will reconsider his decision in the case of Mr. H. M. Foord, of 5, Stapylton Road, Barnet, Herts, who is 87 years of age and was over 24 years in the King's Royal Rifle Corps, and who, because he was awarded a meritorious service medal, has had both his and his wife's old age pension reduced from 6s. to 4s.?

Mr. GREENWOOD: I have no power to reconsider my decision which by the terms of Section 7 (2) of the Old Age Pensions Act, 1908, became final and conclusive. It will, of course, be open to Mr. Foord to raise a question for a pension at an increased rate, if at any time he should consider that his yearly means as calculated under the Old Age Pensions Acts, 1908 to 1924, do not exceed £36 15s.

Colonel HOWARD-BURY: Is it not really a crying scandal that because this man has been awarded a meritorious service medal his old age pension and that of his wife should be reduced?

Mr. GREENWOOD: That may be so, but I was not responsible for that legislation.

Colonel HOWARD-BURY: Is the right hon. Gentleman not responsible for taking steps to put it right?

Oral Answers to Questions — TAXATION (BACHELORS).

Mr. DAY: 61.
asked the Chancellor of the Exchequer whether he has made any estimate of the revenue that would be derived by the State by a special tax upon bachelors; can he give the figures on which such estimate is based; and does he propose introducing legislation on this subject?

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): My hon. Friend gives no indication of the
nature or amount of the tax he has in mind. Obviously, therefore, I can give no estimate of yield.

Mr. DAY: Has the right hon. Gentleman's attention been called to the fact that such taxation has been initiated in other countries?

Mr. HAYCOCK: Is it not the fact that bachelors are already taxed?

Oral Answers to Questions — SUGAR DUTY.

Captain CROOKSHANK: 63.
asked the Chancellor of the Exchequer the amount of duty collected in the years 1927, 1928 and 1929 from home-grown sugar and from other sugars, respectively?

Mr. P. SNOWDEN: With the hon. and gallant Member's permission, I will circulate the figures in the OFFICIAL REPORT.

Following are the figures:

The net amounts of duty collected in the years 1927, 1928 and 1929 in respect of home-grown sugar and imported sugar respectively were as follow:


Year ended 31st December.
Home-grown Sugar.
Imported Sugar.



£
£


1927
…
…
1,254,717
15,611,274


1928
…
…
1,149,242
13,589,419


1929
…
…
1,279,651
11,529,097

Oral Answers to Questions — CINEMATOGRAPH FILMS (GOVERNMENT ASSISTANCE).

Mr. DAY: 64.
asked the Financial Secretary to the Treasury whether there are any cinematograph films being made at the present time in which Government property and material are being used; and will he give particulars?

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): The only cinematograph film of this nature being made at the present time is one representing the Gallipoli campaign, which is being produced with naval assistance. The assistance which is being given is only such as can be afforded without disturbance of ordinary naval duties, and consists of facilities to
photograph His Majesty's ships and the use of boats and the services of personnel to depict landing and other similar scenes.

Mr. DAY: Can the Financial Secretary say whether there is any truth in the statement that the Naval Forces are allowed to assist in the production of these films at very much less remuneration than the Army Forces?

Mr. PETHICK-LAWRENCE: The hon. Member had better put that question down.

Captain CROOKSHANK: Can the hon. Gentleman say who is producing this film? Is it a British film?

Oral Answers to Questions — INDUSTRIAL ASSURANCE (LAPSED POLICIES).

Sir BASIL PETO: 65.
asked the Financial Secretary to the Treasury whether, in view of the exceptional industrial depression and consequent unemployment, the Government will introduce legislation providing that industrial policies shall not be lapsed unless the total amount of arrears exceeds the cash surrender value of the policy?

Mr. PETHICK-LAWRENCE: I regret that I cannot accept this suggestion.

Sir B. PETO: Will not the hon. Gentleman at, any rate consider the question, in view of the very great hardship entailed on those who are suffering from unemployment?

Oral Answers to Questions — AGRICULTURE.

WILLING (HOME-GROWN GRAIN).

Mr. GRANVILLE: 67.
asked the Minister of Agriculture the percentage of home-grown grain that has been used by the British milling industry for the years 1926, 1927, and 1928?

The MINISTER of AGRICULTURE (Dr. Addison): It has been estimated that, on the average of the four years 1924–25 to 1927–28, the percentage of home-grown wheat used by millers represented about 15½ per cent. of the total wheat milled. The proportion necessarily varies from year to year, and precise annual figures are not available.

SMALL HOLDINGS.

Mr. B. RILEY: 68.
asked the Minister of Agriculture the total number of small holdings which have been provided by county councils in England and Wales under the Small Holdings Act, 1926; and the total acreage of such small holdings?

Dr. ADDISON: According to the latest returns received from county councils, the number of holdings provided up to 31st December, 1929, under the Act referred to, was 444 on an area of 9,720 acres. Since that date schemes have been approved relating to a further 172 holdings on an area of 7,027 acres, and in addition a few holdings have been provided without recourse to the Ministry for a contribution.

Mr. RILEY: Is not my right hon. Friend aware that when this Act was passed it was expected that 2,000 holdings would be created, and, in view of the failure to reach anything like that number, could he not take steps to speed up the creation of these small holdings?

Dr. ADDISON: That matter is now under consideration.

HOME PRODUCE (MARKETING).

Mr. B. RILEY: 69.
asked the Minister of Agriculture if he has in contemplation any legislative Measure to provide statutory powers to regulate the marketing of home-grown agricultural products?

Dr. ADDISON: Certain proposals of the kind referred to by my hon. Friend are under consideration, but I am not in a position to make any statement on the subject.

WHEAT AND FLOUR (IMPORTS).

Mr. B. RILEY: 85.
asked the President of the Board of Trade the amount of wheat and flour, respectively, imported into this country from European countries for the year ended April, 1930?

The PRESIDENT of the BOARD of TRADE (Mr. William Graham): The total quantity of wheat and of wheat meal and flour imported into Great Britain and Northern Ireland registered as consigned from continental European countries during the 12 months ended 30th April, 1930, amounted to 4,340,000 cwts. and 1,792,000 cwts., respectively.

Oral Answers to Questions — POST OFFICE.

RURAL TELEPHONES (LEICESTERSHIRE).

Mr. EVERARD: 70.
asked the Postmaster-General how many villages in the county of Leicester have been provided with public telephones in the last year; and how many villages in the same county are still without public telephone facilities?

The ASSISTANT POSTMASTER-GENERAL (Mr. Viant): Public telephones have been installed at 50 village post offices in Leicestershire during the past year, and three others are in course of provision. There are 20 villages with post offices in which no public telephone facilities have yet been provided.

CLAIM (MR. LARCOMBE).

Colonel HOWARD-BURY: 71.
asked the Postmaster-General whether he is yet in a position to state what are the costs that he has incurred in his case against Mr. Larcombe, or when he will be in a position to do so?

Mr. VIANT: The costs incurred by the Post Office amounted to approximately £130.

Colonel HOWARD-BURY: Seeing that the Post Office have withdrawn their claim, which was only for £100, has there not been an utterly unnecessary waste of the taxpayers' money?

Oral Answers to Questions — SOCIAL SERVICES.

Mr. LOUIS SMITH: 19.
asked the Minister of Labour whether her Department is giving assistance to the committee set up by the governing body of the International Labour Office to inquire into the relative cost of social services in the principal countries of the world; and by what date it is anticipated that the material collected by this committee will be published?

Miss BONDFIELD: The answer to the first part of the question is in the affirmative. As regards the latter part, I doubt if it will be posible to specify any date, but I will make inquiries and let the hon. Member know the result.

Oral Answers to Questions — ROYAL AIR FORCE (CIVILIAN CLOTHES).

Colonel HOWARD-BURY: May I ask your Ruling, Mr. Speaker, with regard to Question 79? If I put a question down and neither the Minister nor his representative attends, have I any redress?

Mr. SPEAKER: The hon. Member must hope for the best.

Colonel HOWARD-BURY: May I put a question dawn for Friday morning? Can the Prime Minister tell us what has happened to the Under-Secretary of State?

Colonel HOWARD-BURY (later): 79.
asked the Under-Secretary of State for Air whether he has yet come to a decision with regard to the wearing of civilian clothes by members of the Royal Air Force when off duty and bringing them under the same conditions as exist in the Army at the present time?

The UNDER-SECRETARY of STATE for AIR (Mr. Montague): The regulations governing this question are at present in course of revision, and my Noble Friend has decided to authorise various relaxations of the present rules in the direction desired. When the revised regulations are ready for promulgation, I will send the hon. and gallant Member a copy.

Oral Answers to Questions — GLOVE INDUSTRY (JOINT INDUSTRIAL COUNCIL REPORT).

Major COLVILLE: 84.
asked the President of the Board of Trade if he has received the anual report for 1929 of the Joint Industrial Council of the glove industry?

Mr. W. GRAHAM: Yes, Sir.

Oral Answers to Questions — INDIA (DISTURBANCES, BOMBAY).

Mr. FREEMAN: 87.
asked the Secretary of State for India whether his attention has been called to the injury done by the police to unarmed and non-violent citizens, particularly women and children, in Bombay recently; and what action he is taking to prevent its recurrence?

The SECRETARY of STATE for INDIA (Mr. Wedgwood Benn): In view of the implications contained in my hon. Friend's question, I asked for a report from India, as a result of which I am satisfied that the minimum force neces-
sary was used by the Bombay police in the execution of a very difficult duty.

Mr. FREEMAN: May I assume that non-violent and unarmed citizens are protected in every way possible in these difficult times?

Mr. BENN: Yes, it is our constant desire to prevent violence.

Oral Answers to Questions — LONDON NAVAL TREATY.

Rear-Admiral BEAMISH: May I ask a question, in view of the fact that Questions are over?

Mr. SPEAKER: Yes.

Rear-Admiral BEAMISH: Will the Prime Minister inform the House what legislation is necessary arising out of the Naval Treaty, and what are the intentions of the Government, and will he fairly accurately define the type of legislation?

The PRIME MINISTER: Quite obviously, that question should be on the Paper.

BUSINESS OF THE HOUSE.

Mr. STANLEY BALDWIN: Can the Prime Minister tell us the business for next week?

The PRIME MINISTER: Monday, Finance Bill, Committee.
Tuesday, Housing (No. 2) Bill, Report stage.
Wednesday, Coal Mines Bill, Consideration of Lords reasons for insisting on certain of their Amendments, and of Lords Amendments in lieu of certain of their Amendments to which the Commons have disagreed.
Thursday, Housing (No. 2) Bill; completion of further stages.
The business for Friday will be announced later.

Mr. BALDWIN: When does the right hon. Gentleman expect to take the Supplementary Estimate for the Naval Construction Vote?

The PRIME MINISTER: I am informed that the Supplementary Estimate will be available on Wednesday the 9th, and how it will be treated might perhaps be the subject of an exchange of conversations through the usual channels.

Sir K. WOOD: When will the recommitted Housing Bill be ready? The Committee stage has only just finished and it will be very inconvenient unless we have it at an early date.

The PRIME MINISTER: I was going to announce that the Housing Bill, as amended in the Standing Committee, is now available.

Ordered,
That the Proceedings on the Finance Bill have precedence this day of the Business of Supply."—[The Prime Minister.]

BOOTLE CORPORATION BILL [Lords].

Reported, with Amendments, from the Local Legislation Committee (Section B); Report to lie upon the Table, and to be printed.

BRITISH NORTH AMERICA BILL [Lords].

Read the First time; to be read a Second time To-morrow, and to be printed. [Bill 224.]

MUSICAL COPYRIGHT BILL.

Reported, without Amendment, from the Select Committee, with Special Report, Minutes of Evidence, and Appendices.

Report and Special Report to lie upon the Table, and to be printed.

MESSAGE FROM THE LORDS.

That they have agreed to Amendments to—

West Bromwich Corporation Bill [Lords],

Darlington Corporation Bill [Lords], without Amendment.

Orders of the Day — FINANCE BILL.

Further considered in Committee. [Progress, 2nd July.]

[Mr. ROBERT YOUNG in the Chair.]

POSTPONED CLAUSE 32.—(Valuation of shares in private companies.)

Amendments made:

In page 29, line 36, leave out the word "private."

In page 29, line 37, after the word "company," insert the words "to which this Part of this Act applies."—[Mr. P. Snowden.]

Major NATHAN: I beg to move, in page 29, line 37, to leave out the word "either."
This is the first of a series of Amendments, and I think it will probably be for the convenience of the Committee, Mr. Young, if you permit me to take the substantive point, which is that paragraph (b) be left out, and then when we reach that point, naturally I shall only move the Amendment in a formal way. Throughout the discussion upon the series of Clauses of which this Clause forms part, we have based our remarks upon the assumption that the Clauses were directed at overcoming tax evasion. In this Clause there has slipped in—it almost seemed, at first sight, inadvertently—a provision which is directed at an entirely different subject matter. It is true that paragraph (a), on which there might be a good deal to say, does follow naturally in sequence upon the provisions which have already been the subject of debate, and if paragraph (b), which carries with it Subsection (2) of this Clause, were omitted, there would be a coherence in this whole series of Clauses. But as things are, it is proposed by paragraph (b), introduced in this way, to suggest an entirely new method of valuing securities upon a death, though neither the securities, the death, the person, nor the company involved may have had anything to do, however remotely, with the question of tax evasion, which is the main subject of this series of Clauses. It is, indeed, nothing less than a plain statement that, irrespective of everything which goes
before it and everything which follows it, there is to be interpolated here in this Finance Bill an irrelevant provision which will revolutionise the whole method of valuing shares in companies of a certain character for the purposes of Death Duty.
The Clause is worthy of close examination. It refers to the control of a company to which the Act applies, but the Act applies to many companies in respect of which no question of tax evasion arises in any way whatever. A company is defined in Clause 33 for the purpose of this part of the Bill. In Sub-section (2) of the present Clause a definition is given of what is meant by the word "control" as it appears in Sub-section (1, b). The learned Attorney-General has throughout these difficult days and difficult Clauses brought so much perspicacity and skill to bear upon the interpretation of these Clauses, that I now ask him if he will be good enough to follow me while I go through the Subsection with a view to seeing exactly what is meant. The word "control" at the beginning of paragraph (b) is defined in Sub-section 2 and the word "company" used in the first line of paragraph (b) in Sub-section (1) is defined in Clause 33. With these two definitions in mind, I would ask the learned Attorney-General to follow with me the reading of the Sub-section for this is, as I understand it, how it would read, taking for the moment the first paragraph only of the definition of "company" in Clause 33. It says that, where on the death of any person that person
by virtue of the shares which he controls has control of more than half the voting power of the company .… so constituted as not to be controlled by its shareholders or by any class thereof. …
It seems to me that there has been a complete misundertanding in these Clauses and that the two definitions of "control" in Sub-section (2) as applied to Sub-section (1, b), if applied to the first paragraph (i) in Clause 33, are in complete contradiction one to the other and are impossible of reconciliation. If I am correct—I think I may say that I have not spared pains to attempt to understand the matter—in the assumption upon which we start off, that there is to be a control by virture of a shareholder, there is to be a control in a company which under the definition is not
controlled by shareholding, but in some manner other than shareholding. I find that it is impossible to follow the Clause as drafted. I ask for the attention of the Attorney-General to this matter, and I am sure that he will, with his usual courtesy, be good enough to apply himself to this matter which goes to the root of the Clause as it stands. I believe that these provisions are impossible of reconciliation. I will assume for the moment that the learned Attorney-General, with so much greater ability than I possess, will be able to show how these provision scan be reconciled. I come back to my first proposition which is, that here is an entirely new suggestion as to the manner in which shares shall be valued, though neither the shares, the shareholder nor the company may have had anything at all to do with any aspect of tax evasion, nor have had any contact with any provision in any of the Clause's which we have been debating for so long. What does it propose? It proposes that the value of the shares belonging to the deceased, who, admittedly, may not be a wrongdoer, and the shares in the company which admittedly did not arise in respect of any offending transaction, is not to be ascertained under the Act of 1894, but is to be ascertained by reference to something that is entirely different, namely, the total assets of the company. In the past, for a period going back to 1894, the broad principle upon which property has been valued for the purpose of Death Duty has been the property which actually passed at the death. It is now proposed in this Clause that the property which passes at death shall be valued by reference to some entirely different property, namely, according to the value of the total assets of the company. I do not know whether the Attorney-General has been able to give much study to this Clause, because I know how preoccupied he must have been, but let me read words which will possibly amuse and amaze him. They form one of the most remarkable instances of curious drafting in any Statutes that I have come across. In Sub-section (1) these words are to be found:
the principal value of those shares. … shall not be ascertained in the manner provided by. … the principal Act, but
shall be ascertained by reference to the value of the total assets of the company:
When you come to the "value of the total assets of the company," in Clause 33 you find that the total assets are to be valued by reference to the provisions of the principal Act, which is not to be used according to the words I have quoted. The method which is not to be used there is to be used in Clause 33. The Attorney-General will say, and say with justice, that the subject matter in the first case, namely, shares, differs from the subject matter in the second case, namely, the assets of the company as a going concern, but the measure, the yard-stick—to use the phrase which was used yesterday—is to be the same in either case. Therefore, it becomes clear that it is the subject matter which is altered.
Under the Finance Act, 1894, as amended by the Act of 1909–10, there was a perfectly well-established method of ascertaining the value of shares for Death Duty purposes. It is now proposed to take the valuation of the shares as ascertained by reference to the valuation of the whole assets, of which those shares form only a part, the idea being to attribute to a share-holding carved out of the total value of the assets that proportion of the value so ascertained as the shares bear to the value of the total assets. Let hon. Members note how injustice would be worked and how unreasonable it is. If there is a shareholder who owns 51 per cent. of the shares of a company it by no means follows that the value of his holding is 51 per cent. of the value of the total assets of the company if those assets were available for sale at the moment, and for this reason, that you have 49 per cent. of other shareholders to deal with. It may, indeed, be that your 51 per cent. has no market value at all regarded as a proportion of the shareholding attributed to the total value of the assets. The Committee ought to have a clear explanation why this, proposal, which bears no relation of any kind to the other provisions of this series of Clauses, should have been interpolated here, how the phraseology of the various parts of this Clause and of Clause 33 are reconciled, how it is attempted to justify the proposition that the value of a share-holding is to be ascertained not by reference to
the value of the shares but by reference to the value of an entirety of which those shares form only a part, although the entirety may itself be sadly diminished in value by reason of the fact that the share-holding in question does not absorb the whole of that entirety.

Sir HENRY BETTERTON: On a point of Order. Will it be open to us—I gather that it will be, having regard to the speech of the hon. and gallant Member—to raise the whole question of the valuation of shares, which is really the main purpose of the Clause?

The CHAIRMAN: These six Amendments raise the question of the leaving out of Sub-section (1, a), paragraph (b) of Sub-section I, and also the leaving out of Sub-section (2). Therefore, the discussion must be rather wide.

Sir H. BETTERTON: The speech of the hon. and gallant Member has so fully covered the ground that I wish to do little more than to reinforce and support what he has said. This Clause is one of the most important in the Bill. It cannot be too clearly recognised that it establishes or seeks to establish an entirely fresh system of valuation from that which has hitherto prevailed. I think that it does so in a manner which would be most unfair to the holders of these particular shares, and it proposes to establish a system which the Committee ought to resist. The hon. and gallant Member has pointed out that ever since the passing of the Finance Act of 1894 there has been a perfectly clear definition, laid down in two Acts of Parliament, which states the principle on which the value should be ascertained. The Act of 1894, Section 7 (5), provides:
The principal valuation of any property shall be estimated at a price which in the opinion of the commissioners such property would fetch if sold in the open market at the time of the death of the deceased.
That is the perfectly well-ascertained principle which has been followed ever since that Act came into operation. The Act of 1910, Section 60 (2), which affirms, the principle, says:
In estimating the principal value of any property under Sub-section (5) of Section 7 of the principal Act,
from which I have just quoted,
in the case of any person dying on and after the thirtieth day of April, nineteen
hundred and nine, the commissioners shall fix the price of the property according to the market price at the time of the death of the deceased, and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time.
Those two Acts of Parliament state quite clearly that the market price is the price which is to be applied when ascertaining the value of the shares.
4.0 p.m.
That principle, important as it is, has been made more important by this very Bill, because this Bill enlarges the whole definition of the private company. Owing to the enlarged definition and scope of the words "private company" you may get this situation: Under the Bill the shares are to be valued by the commissioners—shares which at the same time are being quoted on the Stock Exchange. You may have the anomaly of the commissioners arbitrarily deciding that the shares are worth so much, when in fact the quotation on the Stock Exchange may be different. The result is really to put into the hands of the commissioners a power which neither they nor anyone else ought to have. The true and only test in valuing these shares is the market price in the open market. To value the shares by reference to the total assets of the company really is applying a test which need not have any relation at all to the value of the shares which a man holds in a private company when he dies. These words have been construed more than once judicially. They were construed by the present Lord Chancellor, then Mr. Justice Sankey, who said:
It does not follow at all that the price which he obtains under such circumstances is the price which it would fetch if sold in the open market. What is meant by these words is the best possible price that is obtainable, and that is largely if not entirely a question of fact.
That is the true test to apply. I suggest to the Committee that to seek at this time to discriminate and pick out one particular asset and to say that this shall be subject to a capricious and arbitrary valuation which is not applied to any other property, is not only unfair, but is contrary to the principle and the spirit which ought to guide the commissioners.

The ATTORNEY - GENERAL (Sir William Jowitt): I have listened with interest to the two speeches that have
just been delivered. I must confess to the Mover of the Amendment that this is the first time I have heard anyone suggest that in this group of Clauses there is anything which by any stretch of the imagination can be called amusing. It is quite true that Clause 32 does cover ground that is a good deal wider than that covered by the previous Clause. It is desirable that the Committee should understand the difficulties that the Clause is designed to meet. It is true, as has been said, that the law which governs the ascertainment of value of assets for the purpose of Estate Duty is that contained in Sub-section (5) of Section 7 of the Act of 1894, that is to say, the commissioners have to assess the value of the property on the basis of what it would fetch if sold in the open market at the time of the death of the deceased. If we are dealing with a share in a public company that share is quoted on some recognised Stock Exchange and the valuation is easy enough. One of the Amendments which my right hon. Friend the Chancellor of the Exchequer has on the Paper is to except from the operation of this Clause any shares which within a recent period have been quoted or have been the subject of dealings on a recognised Stock Exchange. My right hon. Friend takes them out altogether.
But here you are dealing with what is obviously a one-man company. You have to value the shares in that company. Very often you find that the company has articles which contain some restriction on the right to transfer shares. Think how difficult it is to value shares in such a private company. The shares have never been quoted on a Stock Exchange and have never been dealt in, and perhaps there is the restriction on the right of transfer. You may have the shares held and held only by the deceased and members of his family. How are you going to set about ascertaining what those shares would fetch if sold in the open market? That is the problem. It is a very difficult problem and the commissioners for many years past have been faced with a very real dilemma. On the one hand they have always contended that to ascertain the value of the shares you can only look to the value of the assets of the company and have regard to the extent to which the shareholder is entitled to share in the assets of the
company, and that there is no other basis. On the other hand that has always been contested, and it has been generally argued, on behalf of the deceased person's estate, that you must have regard to the dividends paid on the shares, and that you ought to value on a dividend basis. That has led to very great anomalies.
The Committee, or anyone who has had to try to value these shares, will realise at once what anomalies may arise. Take two companies in exactly similar circumstances. The policy of the one has been to pay as large dividends as it could; the policy of the other has been to put as large a sum of money to reserve as possible and to pay very small dividends. You get this anomalous result: In the latter case where the dividends have been small the value put upon the shares on the dividend basis will be a lower value, in spite of the fact that they have put money to the reserve, than that in the case of the corresponding company which has paid large dividends and has no reserve at all. There are not a few companies where those in control have deliberately kept down the rate of dividend—the one-man company, though I am not suggesting the smallest impropriety—by seeing that the remuneration paid to directors and governing directors is very high remuneration. Consequently a dividend basis is an unfair basis on which to value shares.
There is the problem. You have to value these shares in a company. You can have no recourse to any dealings; you cannot prove a market in the ordinary sense. I suggest that the dividend method is obviously unfair. The only proper method is to have regard to the assets of the company and to see to what the shareholder is actually entitled. With the greatest respect to the last speaker I fail to see that there is the smallest injustice in doing that. The commissioners are a very competent body of persons, in whom the general taxpayer may well place reliance. They are not mere servants of the Exchequer. A great many of the appeals that I have had to conduct in the courts are appeals from those commissioners and frequently I got the judge to decide in favour of the Revenue. The commissioners are a judicial body, well qualified to determine questions of fact, and they have to determine very difficult questions of fact.
I suggest to the Committee that the only basis upon which you can proceed when you are valuing shares in which there has never been a deal, is to disregard the dividend basis and to look at the assets behind the shares, and to see to what the shareholder is entitled by virtue of those assets. Consequently the Clause provides that in these cases the shares shall be valued on an asset basis. The hon. and gallant Gentleman who moved the Amendment raised two difficulties about the drafting of the Clause. I cannot see that either of them is very important. I agree that we say, with regard to shares, that the value "shall not be ascertained in the manner provided by Sub-section (5) of Section 7 of the principal Act," that is to say, it is no good trying to find out what these shares would fetch in the open market, because you have no criterion. On the other hand, there is no difficulty whatever in applying that to the property of the company. A ship or a building can surely be valued. If that ship or building had passed on the death of a person it would be valued in that way. The hon. Member's further point was this: He turned to page 30 of the Bill and said, "Look at the inconsistency in your drafting. When you are defining control you define it in Sub-section (2, a) by saying:
'The control of a company shall be deemed to be in the hands of a person if—
(a) by virtue of the shares which he controls he has control of more than half the voting power of the company,'
and he compares that with the definition of a company "to which the Act applies." I agree that those two provisions cannot be made to square. But the hon. Member has not realised that there are other provisions. For instance, when you are defining "control" there are paragraphs (b) and (c) of Sub-section (2). There is not really any difficulty here. Take Sub-section (2, a), regarding control. It says:
(a) by virtue of the shares which he controls he has control of more than half the voting power of the company.
Compare that with paragraph (ii) of Clause 33:
(ii) has not issued to the public more than half of the shares by the holders whereof it is controlled.
Obviously those two square.

Major NATHAN: I was dealing with what I called the first part of the definition in Clause 33.

The ATTORNEY-GENERAL: Then we are agreed that Sub-section (2, a) of Clause 32 squares with paragraph (ii) of Clause 33, and that Sub-sections (2, b) and (2, c) of Clause 32 square with paragraph (i) of Clause 33. Perhaps it would have been more convenient if we could have placed paragraphs (ii) and (i) in different order, but as a matter of drafting I do not think it matters in which order you put them. I suggest that really there is no difficulty from the point of view of drafting. I had at least thought this with regard to Clause 32, that whereas with regard to Clauses 29 and 30 I at any rate have been willing to confess that I have found the drafting exceedingly difficult, for the drafting of Clause 32, whether it is good or bad policy, there is at least this to be said, that it was clear. I hope the Committee will realise that the object of the Clause is not to resort to the asset basis if there is another and simpler method available, but that we must resort to the asset basis where there is no other means of valuation.

Sir LAMING WORTHINGTON-EVANS: This may be a very complicated discussion. The learned Attorney-General has dealt with so many matters in his speech, that perhaps it is not easy to get back to the original point. May I try to get back? As we stand now, the present method is the market value, and this Bill proposes to alter the market valuation and to adopt what the learned Attorney-General called, and I think not wrongly, the "asset value" basis. There are really three methods of valuation. There is the existing method, the market value. That has been in operation for 36 years. Before you scrap that method you have got to have a very good reason for scrapping it, and you have got to be quite sure that you are adopting a better and a fairer method, in lieu of that which has hitherto existed. The learned Attorney-General says that the dividend basis is the wrong basis, because you might have two companies making the same amount of profit, one of which distributed that profit in dividends on a generous scale, and the other of which distributed small dividends and put large sums to reserve. He says it will be un-
fair to value each of these upon the dividend basis. I am not altogether prepared to quarrel with that statement. I think that would be unfair, if that was the actual basis upon which that valuation did take place. It is not the basis of the existing valuation. The existing valuation is on the market value, which is something different both from the asset value and the dividend value.
The Attorney-General quotes the case—he does this so often that we must bear it in mind, as it is a little apt to mislead us if we do not—the case of the one-man company, and he takes only that, and argues from that one case. There are lots of companies to which this Bill will refer which are not one-man companies at all, but which are companies under which someone gets a benefit within the meaning of the Act, and in those companies there may be shareholders quite separate and apart from the person who gets the benefit. To say that the dividend basis is unfair where there is a single man in control is right, and where he himself dictates the rate of dividend for the purpose of reducing the valuation of the shares upon his death. If you get that case I am quite willing it should be met, but that is not the only case. There are many other cases. There is the case of a good many private companies which will come within this Bill where amongst the shareholders there are partners, or people who would be partners if they were not members of a limited company, but virtually partners. You have employés holding the shares. There is a restriction on transfer, but there is very often what is known as a transfer price, that is to say, a price is fixed either in the articles of association or by means of the articles of association through the auditors, or otherwise, where if one of the shareholders dies or retires from the employment of the company, his shares are automatically transferred to the other shareholders.
There is a transfer price fixed in those gases. If you value on the basis of the assets of the company, as the learned Attorney-General suggests, you might value it at a price much higher than the transfer price, because the object of the transfer price is to enable those who succeed to the business to get a bit of he goodwill of the business, and it
always fixes the transfer price under what you might call the asset value. It is done on purpose so that the younger men may be promoted in the interests of the company, and so that the employés themselves may benefit. If there is a transfer price of, perhaps, 20s. a share, and the actual asset value may be able to be proved to be anything up to 30s. a share, you are going to charge the companies with a Death Duty on the basis of 30s., when 20s. is actually the transfer price. That is unfair. The present method of valuation is the market price. The Attorney-General says that that is not possible to ascertain. [An HON. MEMBER: "Impossible!"] It is not so impossible as the asset value. It may be 30s. when the actual transfer value fixed by the company may be 20s. You are, obviously, doing a great injustice. It is no use substituting another form of valuation for the market valuation, unless it is really a fair one to the individuals concerned.
I suggest that while there are cases where the dividend basis is unfair, those cases are comparatively rare. It certainly is true that the asset valuation can often be unfair. For example, there are many shares quoted on the Stock Exchange at a lower price than the break-up value of the assets of the company. It is no use saying that the asset value is the value which any individual who is going to be a member of the company will receive. He cannot go to the company and say, "I have 10,000 shares; give me my proportion of the assets." The company is going on. The assets may be a good deal more than the market value of the shares. So you have three methods of valuation. One has stood the test of 36 years, that is, the market value. Another is the asset value, which can in many cases be unfair. I will admit that the dividend value in certain cases can also be unfair, but, on the whole, less unfair than the asset valuation. I believe that the wisdom of our predecessors has been right. They have deliberately chosen market value, and in that market value you have a combination of asset value and dividend value, and that is the best combination of the two methods of valuation that you can get.
I hope that the Chancellor will not insist upon this definition. Market value is really better. I am not wanting
to let anybody off. I am only trying to point out that if you adopt the method of valuation, the break-up value suggested by this Clause, you will do a great injustice. You must meet the question of transfer value. How are you going to meet it? It applies to hundreds and hundreds of private companies. It has nothing to do with attempting to avoid Death Duties. It is a common practice that there shall be—the learned Attorney-General admitted this—a restriction of transfer. He did not go quite far enough. These restrictions of transfer are accompanied by a transfer price, or a method of ascertaining the transfer price. The method is very often left to the auditors for the time being, to fix a fair price between a willing seller and a willing buyer. That is a frequent clause in the articles. It seems to me that the learned Attorney-General has not made out his case for a change. The wisdom of those who were responsible for the 1894 Act, whoever they were, was right. They got the market value, which was a sort of medium between assets and dividends.

Sir SAMUEL ROBERTS: I would like to draw the attention of the Committee to what actually happens when a valuation of this kind is being made. If there is any quotation on the Stock Exchange, the first thing that the Inland Revenue Commissioners ask is, "Have there been any sales at arm's length?" and the particulars of these sales at arm's length, or, if they doubt it, particulars as to whether they were or were not at arm's length are sent up. Then they ask for the dividends over a certain number of years and they almost invariably ask for the last three years' balance sheets and profit and loss accounts. They look at the particulars of the dealings which have taken place, also at the dividends which have been paid, at the assets value, and see whether the assets value properly corresponds with the dividends which have been paid. Then they query, or put up a valuation that has been put upon those shareholders by the executors. The result is usually an interview at Somerset House, where all these things are gone into. The market value may have no possible relation to what the executor could possibly get if those assets were
put into the market. There is such a difference in the way of taking assets, whether you take them individually or take them all together as a going concern, or at the break-up value.
In what way are the commissioners or the executors to know the way in which those assets are to be taken? It seems a difficult thing to do, and it is grossly unfair as between two companies. In one of these companies the deceased might have owned 51 per cent. of the shares, and in another company be only a shareholder to the extent of 20 per cent. The death of the man who held only 20 per cent. means that this process will have to go on just the same, and the Commissioners of Inland Revenue will act in exactly the same way as they have done in the past. With regard to the man who happens to have a 51 per cent. share, then this new form of valuation would have to take place. There is great unfairness between the case of a man who has a share in a private company, and one who has shares in a company where there is a quotation on the Stock Exchange. In times of very deep depression a quotation on the Stock Exchange very often, and in good companies, will go down far below the asset value, and that is all that the man could get if he put them in the market at the time of his death, and that is all that he ought to pay. If you are going to take each individual asset and work on that, you might have an asset paying 25, 50 or even 100 per cent. more than that man could get if the shares had to be sold.
If you are simply to say that as he had the control he could sell the assets, and go out of business, well, I have never heard the suggestion that the Revenue is concerned simply to make people go out of business in order to realise their assets in that way. I think it is a very dangerous method of valuation, because it will cause great injustice, and I do not think there is anything really wrong with the present method. The vast majority of cases are settled amicably between the executors and the Inland Revenue. Probably only the few extra ordinary cases have been brought to the notice of the Chancellor and he does no realise how many there are where there is no difficulty at all.

Sir DENNIS HERBERT: The Attorney-General has put up a good case as to the need for some alteration in the law in regard to the valuing of shares of a particular type. I do not think he has hit upon the right course of doing it. I am going to make a suggestion as to the way he could meet this criticism, and, at the same time, achieve the object of this part of the Bill. The hon. Member for Ecclesall (Sir S. Roberts) has referred to the practice at the present moment, and his description is perfectly correct. Strictly speaking it may not be authorised by the law. Instead of this peculiar arrangement of arriving at asset value I would suggest that in those cases where there is no market value, or where the actual market value is not a proper criterion of the read value, you should endeavour to put in words to this effect: the intrinsic value to the deceased at the time of his death. That would work out very well.
Let me give one or two illustrations to show how absolutely and impossibly unfair the method proposed may be in some cases. The Chancellor of the Exchequer smiled when the right hon. Member for St. George's (Sir L. Worthington-Evans) was speaking, but I think he will recognise that the case I am going to submit is one that is really serious, if the shares are valued on an asset basis. I know one or twit big businesses which would come under this Clause. If the owner or controller of a business desires to give his employés or his principal employés a certain interest in the business, under a kind of profit-sharing arrangement, a very common method is to give these employés ordinary or deferred shares, but only on the express condition that at their death the shares are to be transferred back to him at their par value. In the case I have in mind, the company has paid dividends between 12½ per cent. and 25 per cent. on its ordinary shares. The employés hold these shares, and during their lifetime they are the absolute owners. They take the dividends; but on their death their executors are bound to dispose of them to the former owner at par value. If you are to arrive at the value of these shares on an asset basis, it would certainly be over £2, and I do not think the Chancellor of the Exchequer will suggest that comparatively poor people, the employés of a business like this, should
have their small estate mulcted in Death Duties on shares valued at over £2 on an asset basis when their executors are bound to accept £1 for them.
Let me give an example of a different type of case. It is not an uncommon thing, in these days when the speculative builder and the land developer are looked upon with fear by those who want to preserve the beauties of our countryside, for patriotic people who are fairly well off and living in a beautiful part of the country to form a company if they find that a large estate is to be cut up and sold and likely to be developed in such a way as to ruin a great part of that district. They form a company and purchase the essential portions of the estate, and they so arrange matters that under the regulations of the company which holds the land that has been purchased none of the land is ever to be sold without the consent of all the owners. In the meantime nothing is to be done with it which will in any way spoil its amenity value to the district; and in many places to the country as a whole. If you value the shares of a man in that company on an asset basis it would be presumably on the price that land would fetch if it were sold in the open market. That may be anything from £500 to £1,000 an acre, yet that property is probably not producing more than 10s. or £1 per acre, if as much. In the meantime the man who owns shares and thereby his interest in that land can never sell his shares except to persons in the same company who would never agree to take them at par value. Certainly such shares will never be intrinsically worth anything like their asset value if the company is broken up.
I suggest that I have made an absolutely unanswerable case for the contention that the proposals in this Clause will work most unfairly in a large number of cases; which, I say, deserve the utmost sympathy. I admit that the Attorney-General has made a good case for some alteration, but I hope that the Chancellor of the Exchequer will endeavour to see if it is not possible to hit upon some other form of valuation, somewhat on the lines I have suggested, that is, the basis of their intrinsic value to the deceased at the time of his death.

Sir ALFRED LAW: The Minister, I think, has made a very good reply to the
criticisms of this Clause. It must be remembered that we are not dealing with public but with private companies. I have two cases in mind. It may happen that the value of the assets of a company may be much less than the price at which the shares change hands, it may also be more, and that is the obvious reason for this Clause: to ascertain some kind of real value of the shares possessed by the deceased. That, I presume, is after deducting what is due from the company to his creditors. This, however, is a rather roundabout way of doing it, and I would suggest that in the case of private companies the fairest thing to do is to leave the matter to the honesty of the directors to say what they consider to be the value of the shares held by the deceased. I have had to do that myself. I have had to value shares in the case of a deceased person who held shares in a particular company, and the directors have always been most scrupulous not to put too low a value upon them for probate. It is much better to trust to the honesty of directors and not devise a scheme whereby they will be put to a tremendous lot of trouble to value their assets. They know the real value of the shares.

Mr. SMITHERS: We have had a special definition of a company, now we have a special method for the valuation of shares. The present system has been in existence for over 30 years, and we are now trying to devise some method by which shares which cannot be valued on Stock Exchange quotations may be valued. It is proposed that they shall be valued in relation to the total assets of the company. Is there to be no differentiation between classes of shares? Suppose the deceased held preference shares on which the dividends are limited, or held ordinary shares on which dividends vary. Are these two kinds of holdings to be valued in the same way? During his lifetime the benefit on his preference shares was limited. This is not a fair method of valuation. I want to make a concrete suggestion, and I hope the Attorney-General will follow me through the Bill, because it is a suggestion which, I think, is worthy of his attention. It seems to be taken as the outcome of this discussion that the fairest value, if it can be arrived at, is
the market value and apparently, in essence, the Government agree to that principle. The Chancellor of the Exchequer has an Amendment later on the Paper—to add:
(3) This section shall not apply to shares which have, within the period of 12 months immediately preceding the death of the deceased, been the subject of dealings on a recognised stock exchange in the United Kingdom or been quoted in the official list of such a stock exchange."—
in which he seems to adopt that principle, as far as it can be adopted. I think that it can be adopted right through the whole of these proceedings and my suggestion is that in line 5, page 30, we should insert the word "market" so that the Clause will read:
but shall be ascertained by reference to the market value of the total assets of the company.
Then, in the Definition Clause, we might define how that market value is to be arrived at in cases not already provided for. I suggest that there are experts in the City who could deal with the question but, I do not go into that aspect at the moment. It might be possible, however, to insert words in the Definition Clause providing that the market value should be arrived at by the Government broker in consultation with a chartered accountant or in some such way. I have in my own experience known cases of shares for which there was no quotation but the trustees concerned and the Inland Revenue have been willing to accept a valuation for the purposes of probate made by the strockbroke. The stockbroker has had regard to the class of the company and the kind of business which it is doing, and any information available about it, and, on that basis, he has given to the best of his ability an estimate of the value of the shares at the date of the death. The right hon. Gentleman the Member for St. George's (Sir L. Worthington-Evans) has already pointed out that the market value brings in both income value and asset value. I hope that the Attorney-General has followed my point, that he will include the term "market value" and will then indicate how that market value for the purposes of the Clause is to be determined. In all sincerity, I think that is the fairest way of dealing with the valuation of these shares.

Mr. ARTHUR MICHAEL SAMUEL: We must not allow ourselves to be lulled into a state of satisfaction by the patience, the courtesy and the eloquence of the Attorney-General. We on this side ought not to assume, because the hon. and learned Gentleman has been so patient and so courteous with us, that he has answered our case. I submit that he has not answered the case put forward from this side. We have heard a great deal in these discussions about the one-man company. Let us take the case of the one-man company. The suggestion put forward by my hon. Friend the Member for Watford (Sir D. Herbert) has brought out the weakness of the case for this Clause. He used the words "the fair intrinsic value to the deceased at the time of his death." Now as the right hon. and learned Gentleman has been harping on the one-man company may I ask what value are the shares in such a concern at the time of the death of the man whose personality and skill have maintained the earning value of that company? Take, for example, the great Bond Street art firms and dress designers. Take the case of a firm of accountants whose prosperity is based on the skill and personality of one man. I am sure many hon. Members have such cases in mind. There are many firms of different kinds which are dependent on the energy and ability of an individual and the assets of such a firm die when that man dies.
I ask the Attorney-General are we to take the asset value five minutes before the man's death, or at the moment of his death, or five minutes after his death? What is the market value of the shares of a one-man company when the man on whom the whole responsibility for the earning power of that company has rested passes away. If a prospective buyer of shares anticipated that the man who represented the earning power of the concern was about to pass away, he would give nothing for the shares of the company. If known to the buyer the man had passed away the purchaser of shares would put a value on those shares infinitely less than the value which would be assumed by the Revenue. Taking the line of argument adopted by the Attorney-General in reference to the one-man company I say that the earlier asset value has no relation to the actual
value at the time of death and that the method proposed is not a fair method. I repeat my query as to what is to be the moment of valuation. Let us get that one point settled. Let us pin the Attorney-General down to it. Is the actual moment of valuation to be the moment before the man's death, the moment of his death or the moment after his death, because after the death of such a man, in the circumstances which I have already indicated, the shares have no great value?
I do not need to emphasise the point which has already been made about the possible restriction on shares but there is another point. A company may possess assets which have been bought because they have had a what is known as a "nuisance value." How will those be valued? Let it be supposed that I am a manufacturer of a certain article. I am the only owner of the concern and I have a trade mark. There is a competing concern also with a trade mark. I buy that concern and absorb the trade mark and keep it in my possession. It has no asset value whatever because I have killed the business which centred round it in order to prevent competition with my own business. It has had a "nuisance value" but once I have absorbed that trade mark and the goodwill of the business with which it was connected, what asset value has it? Take the case of two newspapers which have been amalgamated. Each has cost a great deal of money but after a few years when two newspapers amalgamate there is no asset value in one of those newspapers. Take two trading concerns competing against each other. The more prosperous one may purchase the less prosperous one with all its trade marks and goodwill and so forth and then kill it. How does the Attorney-General propose to get at the asset value in such a case as that?
Then there is the not unusual case in which the proprietor of a business holds back shares in his own company, and in order to encourage his employés, says to them: "As long as this company is in existence you shall have these shares at a nominal figure." In what way are you to arrive at a valuation of assets hampered thus in cases of that kind? Taking all these matters into account, I hope, as I said before, that hon.
Members on this side will not allow themselves to be bemused by the speeches of the Attorney-General, and will not be persuaded into adopting the method proposed in this Clause. As has been said over and over again, we are all agreed as to preventing tax-dodging, but it does not follow that we should give our approval to slippery and sloppy legislation of this description. [HON. MEMBERS: "Oh!"] I claim that we have every right to use an expression of that kind. During the 12 years that I have been a Member of the House of Commons I have never known Clauses remodelled entirely like Clauses 29 and 30 of this Bill, and there is little reason to assume that the quality of the Clause now under discussion is different from those Clauses. It is, if I may use the expression, equally "riddleable."

Mr. MOSES: What valuation would the hon. Gentleman put upon that word?

Mr. SAMUEL: Then, shall I say that it is equally pervious to criticism? We shall certainly go into the Division Lobby againt it. I submit that in these cases, where a property is under the control of one man, the valuation should be made on the capitalisation of the distributable earnings after the death of the man and not before the death. That method certainly would be less unfair than the unsound method laid down in this very "attackable" Clause.

Mr. ATKINSON: I have a suggestion to make which may or may not be helpful, but before doing so I wish to point out that the reason why market value is so often taken as the value of anything is because it is generally a value which can be realised. But to apply market value to assets for the purpose of getting at the value of shares is obviously unfair, because that value of course cannot be realised. For all that, the value of a company's assets is an element which ought to be taken into consideration, and I do not set why the Commissioners should be limited as to the matters which they can take into consideration in ascertaining the value of shares.
I am particularly interested in this matter because recently I have had to deal with this very problem as an arbitrator. It was the case of a private company. The man who held the bulk
of the shares died and under an agreement—I forget whether it formed part of the articles or not, but at any rate under an existing agreement—the other shareholders had to take his shares at a valuation. That valuation had to be fixed by arbitration, and I was appointed to act as the arbitrator. It was an interesting case, but one of a kind Ns which is not at all uncommon. This was a trading concern and if I had simply valued the assets, including the goodwill, it would have been quite an easy matter, but then the price fixed would not have been nearly high enough. The profits had been very big for some time because there was a price ring to which the firm belonged. As long as the price ring continued the profits of the company would be very high. That point was conceded, and the whole difficulty was to say how long the price ring was going to last. If one could have been sure that the price ring was going to last indefinitely the value of those shares would have been very high, but if the ring were to come to an end at once, or if it was likely to come to an end in the immediate future, then the value of the shares would be much lower. The whole difficulty which I had and which all the witnesses had was how to value the probability of the continuance in existence of that price ring. It was not goodwill. It was something quite apart from goodwill, but it was a material element which I had to take into consideration in trying to get at the value of the shares.
The test which I laid down for myself in that case, and the test which I suggest should be incorporated in this Clause is one which has been applied over and over again, and that is "the price which a willing purchaser would pay to a willing seller." That test has been recognised by the law. It is one with which accountants and valuers are perfectly familiar and it takes into consideration everything which has a bearing upon value. I am not sure that it is very different from the suggestion of my hon. Friend the Member for Watford (Sir D. Herbert), but I think it presents a method of ascertainment in a simpler way. A willing purchaser takes into consideration the assets of the company. He looks into those to see where he is, in the event of a winding-up of the company. He also takes into consideration past
earnings, but what really actuates the willing purchaser are the chances of earnings in the future. If the probabilities are good he is ready to pay a bigger price. I do not think he is influenced very much by the market value of the shares, because, of course, the market value of the shares in a private company is very often far below the real value, as there is a very limited market far them. What really interests the purchaser is the question of the profits which that company is going to make. If these words, "the price which a willing purchaser would pay to a willing seller" were incorporated, the commissioners could take into consideration the value of the assets, the dividends in the past, and the chances of earnings in the future, and thus arrive at a really fair value upon which taxation should be levied. I submit that it would meet every objection which has been urged.
5.0 p.m.
May I ask two questions? In the last line of Sub-section (1), what is the meaning of "the sum of money therein referred to"? I do not know what the "therein" is, because we have two Subsections, and looking at both I cannot see any reference to a sum of money, but perhaps I have overlooked something. The other question is this—and you are only dealing with a company which is a private company within the definition. If this deceased person held and had held from the outset 51 per cent. of the shares, he comes within this Clause, but if the public had subscribed 51 per cent. of the shares and the deceased had acquired by purchase a majority of the shares——

The ATTORNEY-GENERAL: Is not that dealt with under Clause 33?

The CHAIRMAN: We cannot discuss Clause 33 now.

Mr. ATKINSON: I am only wanting to point out an inconsistency. You are going to set up a method of valuation which will apply in the case of a man who from the outset has had 51 per cent. of the shares, but you would have to adept a different valuation if he had become the main shareholder by purchase. You are going to have two different methods of valuation for really the same position. I should have thought it would be easy, in all these cases of
private companies, to have a method of valuation on the lines I have suggested. It would be fairer, and in many cases it would be better for the Revenue.

Captain BOURNE: Will the Attorney-General reconsider this method of valuation? I fear that many private companies will come within this Clause which are not the one-man companies aimed at, and I am frightened of the case where you are dealing with a private company, formed for purely commercial reasons, which carries on a somewhat speculative business. I can think of several such companies, which at fairly regular intervals make rather large profits, but in between those intervals they may have a series of lean years. Such a company may put a large amount of money to reserve so as to be able to equalise its dividends year in and year out. I take it that the real value of the shares in that company is roughly the market value, or what a willing purchaser will give for them. If a man dies at the end of a lean period, the assets of the company will be very low, but, roughly speaking, what any willing purchaser would give for the shares is more or less a constant sum in such a case. He knows fairly well what the average dividends amount to and what the risks and the assets of the company are.
It seems to me that we want to keep, as far as we can, that principle of market value—the transfer between a willing buyer and a willing seller—which enters so much into our law of values. Surely, when you have a judicial body of experience dealing with these cases, it is far better to lay it down in some way that the value shall be arrived at on the basis of the price agreed between a willing buyer and a willing seller, and leave this very wise judicial body to make up its own mind how far the assets should be taken into account and how far the dividends should be taken into account, and so on. I support the suggestion made by my hon. and learned Friend the Member for Altrincham (Mr. Atkinson).

Sir BOYD MERRIMAN: I do not propose to add anything to the general discussion, but I want to ask the Attorney-General a specific point in regard to one of the Amendments which is included in the group with which we are dealing. It is a condition of bringing into effect
this particular method of valuation, whatever method is adopted, that
there is deemed by virtue of the provisions of this Part of this Act to pass on the death a sum of money proportional to the value of the total assets of the company.
That is Sub-section (1, a) of Clause 32, and obviously, when that was drafted, it was intended to catch, and did catch, the whole of the cases indicated in Clause 29, because that Clause was then based on a calculation which simply took into account the proportion to the total assets of the company arrived at by taking the proportion between the value of the benefit and the value of the total income of the company; but owing to the way in which Clause 29 has been amended, that is no longer true of Clause 29. We will say, for the sake of argument, that you find your proportion between the value of the benefit and the value of the total income of the company to be 60 per cent. You apply that 60 per cent. to the total assets of the company, as Clause 29 originally stood, but as it now stands—it is rather a roundabout way of doing it—you reduce that sum by the amount which the original subject matter of the transfer, as valued at the date of death, falls short of that sum; in other words, what you really do, as has been pointed out over and over again, is to limit the sum deemed to pass at death to the value, at the date of death, of the subject matter of the transfer, provided always that it does not amount to more than the proportion or more than the whole of the assets of the company.
In a case, therefore, where what really passes at death is only the present value of the subject matter of the transfer, does this Clause apply at all, or does it not? It is impossible to say of that case that there is then passing a sum which is proportional to the value of the total assets of the company, except in the sense that any sum which is smaller than another is proportional to the higher sum. The point that I am trying to make is that the whole basis of that particular form of definition has really gone, by virtue of the alteration of Clause 29, which reduces the amount to the amount representing the value, at the date of death, of the subject matter of the transfer.
That is the first question, and the second is this: There is a proviso in line 6, on page 30 of the Bill, and quite frankly I am puzzled by it, and I want the Attorney-General to tell us what it means. Supposing a case in which the amount being transferred to the company does in fact represent the total assets of the company, either because it has very greatly increased in value or because it was the only thing transferred to the company, and supposing that that is the position at the date of death, so that there is no question of any falling short or of any reduction of that sum, the thing that passes is 100 per cent. of the total assets of the company. The proviso says:
Provided that in cases falling within paragraph (a) of this sub-section, the value of the total assets of the company shall, for the purposes of this section, be deemed to be reduced by the sum of money therein referred to.
The sum of money that is referred to in paragraph (a), as I understand it, is the
sum of money proportional to the value of the total assets of the company,
which in the case supposed is a sum proportional to 100 per cent. of the total assets. Does that mean that the value of the total assets of the company is reduced by 100 per cent. of the total value of the assets of the company, and, if so, what happens? If you have reduced 100 per cent. by 100 per cent., how then do you assess the value of the shares by reference to the value of the total assets of the company? If the Attorney-General will give me an answer to those questions, I shall be much obliged to him.

The ATTORNEY-GENERAL: The hon. and learned Member for Altrincham (Mr. Atkinson) asked what I understood by the words "therein referred to" in the proviso at the end of Sub-section (1). I understood, as the hon. and learned Member for Rusholme (Sir B. Merriman) understands, that the words "sum of money therein referred to" mean the sum of money referred to in line 40, on page 29, that is to say:
a sum of money proportional to the value of the total assets of the company.
Then he asked me—though I rather doubt whether you, Mr. Young, would let me pursue the matter at any length—a question which I venture to think arises on Clause 33, but it can be answered very shortly.

The CHAIRMAN: What I am afraid of is that when we get to Clause 33 we shall be having it all over again.

The ATTORNEY-GENERAL: I will deal with that then in due course. The hon. and learned Member for Rusholme was good enough to call attention to the use of the word "proportional." Of course, when you have drafted a whole group of Clauses, you want to consider very carefully whether language that was perfectly appropriate when drafted has become inappropriate by reason of alterations made in the Clause since. I shall certainly look into that point, but, as it occurs to me at the moment, I do not think the word has become meaningless, because, after all, under Clause 29 you always proceed still by means of the proportional sum as the first step in your machinery. It is true that under Clause 29 you may in certain events have to deduct something very different, but the whole thing is based upon a proportional sum. However, I will consider what the hon. and learned Member says.
Then he asked what was the effect of the proviso on page 30. I think that I am right in saying that under Clause 29 it is provided that in any case you make certain reductions in respect of the value of the shares; it follows, therefore, that you are not dealing with a case where you are taxing 100 per cent. Under Clause 29, where you are dealing with a sum of money which is due to pass, you must make certain deductions in respect of the shares held by the deceased. We are here dealing only with a case where shares were held by the deceased. That being so, it follows that under Clause 29 you cannot tax the full 100 per cent. The proviso is to guard against the possibility of double taxation.

Mr. SMITHERS: Three of us, with the utmost desire to help the Government, put forward three concrete suggestions. The hon. and learned Member for Altrincham (Mr. Atkinson) put forward one, the hon. Member for Watford (Sir D. Herbert) put forward one, and I put forward another, but we have not had a reply.

The ATTORNEY-GENERAL: I did not mean to be discourteous, but I confined myself to answering specific questions, because hon. Members will realise
that, having thought that this basis which we have put down is the right one, and having considered various other bases, we considered it necessary to adhere to the proposal which we have suggested.

Sir D. HERBERT: Does the hon. and learned Gentleman adhere to it to such an extent that he answers my question in the negative, and that he will not consider the special cases which I put to him and the question whether he cannot get some words which would be good enough for him, but would not be unfair to the particular cases to which I referred?

The ATTORNEY-GENERAL: I always consider any observations which the hon. Gentleman makes, but I cannot hold out any hope that we shall be able to accept his suggestion.

Mr. SMITHERS: I take it that the Government accept in principle that the market value is the value to arrive at, because the Chancellor has put down an Amendment to deal with that later. Will the Attorney-General at least promise that, if that is the principle of the Government, he will, without committing himself, read through this debate between now and the Report stage, and see if it is not a fact that the Government really and truly mean to arrive at a fair market value, and consider if it is possible to put in some words to bring about that much desired thing?

The ATTORNEY-GENERAL: I will read what the hon. Member has said.

Mr. SMITHERS: I must protest against being treated in this jocular way. This is a very serious thing. I do not want the hon. and learned Gentleman to read what I have said, but three or four suggestions have been made, and I ask him to consider them, and if he sees that there is any force in the arguments, to do something on the Report stage.

The ATTORNEY-GENERAL: If I say that I will consider this matter, I may so easily lead the Committee to form a false impression. Of course I will read what has been said, but I do not want the Committee to be under the impression that we are prepared in any way to depart from our proposal.

Question put, "That the word 'either' stand part of the Clause."

The Committee divided: Ayes, 254; Noes, 132.

Division No. 407.]
AYES.
[5.20 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Hartshorn, Rt. Hon. Vernon
Mort, D. L.


Adamson, W. M. (Staff., Cannock)
Hastings, Dr. Somerville
Moses, J. J. H.


Addison, Rt. Hon. Dr. Christopher
Haycock, A. W.
Mosley, Lady C. (Stoke-on-Trent)


Alpass, J. H.
Henderson, Right Hon. A. (Burnley)
Mosley, Sir Oswald (Smethwick)


Ammon, Charles George
Henderson, Arthur, Junr. (Cardiff, S.)
Muggeridge, H. T.


Arnott, John
Henderson, Thomas (Glasgow)
Murnin, Hugh


Aske, Sir Robert
Henderson, W. W. (Middx., Enfield)
Naylor, T. E.


Attlee, Clement Richard
Herriotts, J.
Newman, Sir R. H. S. D. L. (Exeter)


Ayles, Walter
Hirst, G. H. (York W. R. Wentworth)
Noel Baker, P. J.


Baker, John (Wolverhampton, Bliston)
Hirst, W. (Bradford, South)
Oldfield, J. R.


Baldwin, Oliver (Dudley)
Hoffman, P. C.
Palin, John Henry.


Barnes, Alfred John
Hollins, A.
Paling, Wilfrid


Barr, James
Horrabin, J. F.
Palmer, E. T.


Batey, Joseph
Hudson, James H. (Huddersfield)
Parkinson, John Allen (Wigan)


Bellamy, Albert
Hunter, Dr. Joseph
Perry, S. F.


Benn, Rt. Hon. Wedgwood
Hutchison, Maj.-Gen. Sir R.
Pethick-Lawrence, F. W.


Bennett, Capt. Sir E. N. (Cardiff C.)
Isaacs, George
Phillips, Dr. Marion


Bennett, William (Battersea, South)
Jenkins, W. (Glamorgan, Neath)
Pole, Major D. G.


Benson, G.
John, William (Rhondda, West)
Potts, John S.


Bentham, Dr. Ethel
Johnston, Thomas
Price, M. P.


Bevan, Aneurin (Ebbw Vale)
Jones, F. Llewellyn- (Flint)
Quibell, D. J. K.


Bondfield, Rt. Hon. Margaret
Jones, J. J. (West Ham, Silvertown)
Ramsay, T. B. Wilson


Bowen, J. W.
Jones, Rt. Hon. Leif (Camborne)
Raynes, W. R.


Bowerman, Rt. Hon. Charles W.
Jones, Morgan (Caerphilly)
Richards, R.


Brockway, A. Fenner
Jones, T. I. Mardy (Pontypridd)
Richardson, R. (Houghton-le-Spring)


Brothers, M.
Jowett, Rt. Hon. F. W.
Riley, Ben (Dewsbury)


Brown, C. W. E. (Notts, Mansfield)
Jowitt, Rt. Hon. Sir W. A.
Riley, F. F. (Stockton-on-Tees)


Brown, Ernest (Leith)
Kelly, W. T.
Ritson, J.


Brown, W. J. (Wolverhampton, West)
Kennedy, Thomas
Romeril, H. G.


Buchanan, G.
Kenworthy, Lt.-Com. Hon. Joseph M.
Rosbotham, D. S. T.


Burgess, F. G.
Kinley, J.
Rowson, Guy


Buxton, C. R. (Yorks. W. R. Elland)
Knight, Holford
Russell, Richard John (Eddisbury)


Caine, Derwent Hall-
Lang, Gordon
Salter, Dr. Alfred


Cameron, A. G.
Lansbury, Rt. Hon. George
Samuel, Rt. Hon. Sir H. (Darwen)


Cape, Thomas
Lathan, G.
Samuel, H. Walter (Swansea, West)


Charleton, H. C.
Law, Albert (Bolton)
Sanders, W. S.


Chater, Daniel
Law, A. (Rosendale)
Sandham, E.


Church, Major A. G.
Lawrence, Susan
Sawyer, G. F.


Clarke, J. S.
Lawrie, Hugh Hartley (Stalybridge)
Scrymgeour, E.


Cluse, W. S.
Lawther, W. (Barnard Castle)
Scurr, John


Clynes, Rt. Hon. John R.
Leach, W.
Sexton, James


Cocks, Frederick Seymour
Lee, Frank (Derby, N. E.)
Shaw, Rt. Hon. Thomas (Preston)


Compton, Joseph
Lee, Jennie (Lanark, Northern)
Shepherd, Arthur Lewis


Cove, William G.
Lees, J.
Sherwood, G. H.


Daggar, George
Lewis, T. (Southampton)
Shield, George William


Dallas, George
Lindley, Fred W.
Shillaker, J. F.


Davies, E. C. (Montgomery)
Lloyd, C. Ellis
Shinwell, E.


Day, Harry
Logan, David Gilbert
Simmons, C. J.


Ede, James Chuter
Longbottom, A. W.
Sinkinson, George


Edmunds, J. E.
Longden, F.
Sitch, Charles H.


Edwards, C. (Monmouth, Bedwellty)
Lowth, Thomas
Smith, Ben (Bermondsey, Rotherhithe)


Edwards, E. (Morpeth)
Lunn, William
Smith, Frank (Nuneaton)


Egan, W. H.
Macdonald, Gordon (Ince)
Smith, H. B. Lees (Keighley)


Elmley, Viscount
MacDonald, Rt. Hon. J. R. (Seaham)
Smith, Tom (Pontefract)


Evans, Capt. Ernest (Welsh Univer.)
MacDonald, Malcolm (Bassetlaw)
Smith, W. R. (Norwich)


Foot, Isaac
McElwee, A.
Snell, Harry


Forgan, Dr. Robert
McEntee, V. L.
Snowden, Rt. Hon. Philip


Gardner, B. W. (West Ham, Upton)
McGovern, J. (Glasgow, Shettleston)
Snowden, Thomas (Accrington)


Gardner, J. P. (Hammersmith, N.)
McKinlay, A.
Sorensen, R.


George, Megan Lloyd (Anglesea)
MacLaren, Andrew
Stamford, Thomas W.


Gibbins, Joseph
Maclean, Neil (Glasgow, Govan)
Stephen, Campbell


Gibson, H. M. (Lancs, Mossley)
MacNeill-Weir, L.
Strachey, E. J. St. Loe


Gill, T. H.
Mander, Geoffrey le M.
Strauss, G. R.


Gillett, George M.
Mansfield, W.
Sullivan, J.


Glassey, A. E.
March, S.
Sutton J. E.


Gossling, A. G.
Marcus, M.
Thomas, Rt. Hon. J. H. (Derby)


Graham, D. M. (Lanark, Hamilton)
Markham, S. F.
Tinker, John Joseph


Graham, Rt. Hon. Wm. (Edin., Cent.)
Marshall, Fred
Toole, Joseph


Granville, E.
Mathers, George
Tout, W. J.


Gray, Milner
Matters, L. W.



Greenwood, Rt. Hon. A. (Colne)
Maxton, James
Townend, A. E.


Grenfell, D. R. (Glamorgan)
Messer, Fred
Turner, B.


Griffith, F. Kingsley (Middlesbro' W.)
Middleton, G.
Vaughan, D. J.


Groves, Thomas E.
Millar, J. D.
Viant, S. P.


Grundy, Thomas W.
Montague, Frederick
Walker, J.


Hall, F. (York, W. R., Normanton)
Morgan, Dr. H. B.
Wallace, H. W.


Hall, G. H. (Merthyr Tydvil)
Morley, Ralph
Wallhead, Richard C.


Hall, Capt. W. P. (Portsmouth, C.)
Morris, Rhys Hopkins
Walters, Rt. Hon. Sir J. Tudor


Hamilton, Mary Agnes (Blackburn)
Morris-Jones, Dr. J. H. (Denbigh)
Watkins, F. C.


Hardle, George D.
Morrison, Herbert (Hackney, South)
Watson, W. M. (Dunfermline)


Williams, Dr. J. H. (Llanelly)
Wilson, R. J. (Jarrow)
TELLERS FOR THE AYES.—


Wilson, C. H. (Sheffield, Attercliffe)
Winterton, G. E. (Leicester, Loughb'gh)
Mr. Hayes and Mr. Whiteley.


Wilson, J. (Oldham)
Wood, Major McKenzie (Banff)



NOES.


Wedgwood, Rt. Hon. Josiah
Dudgeon, Major C. R.
Oliver, P. M. (Man., Blackley)


Welsh, James (Paisley)
Edmondson, Major A. J.
Ormsby-Gore, Rt. Hon. William


Welsh, James C. (Coatbridge)
Elliot, Major Walter E.
Peake, Captain Osbert


West, F. R.
Erskine, Lord (Somerset, Weston-s-M.)
Penny, Sir George


Westwood, Joseph
Everard, W. Lindsay
Percy, Lord Eustace (Hastings)


White, H. G.
Falle, Sir Bertram G.
Peto, Sir Basil E. (Devon, Barnstaple)


Whiteley, Wilfrid (Birm., Ladywood)
Fermoy, Lord
Pownall, Sir Assheton


Wilkinson, Ellen C.
Fielden E. B.
Ramsbotham, H.


Williams, David (Swansea, East)
Forestier-Walker, Sir L.
Reid, David D. (County Down)


Acland-Troyte, Lieut.-Colonel.
Ganzonl, Sir John
Remer, John R.


Albery, Irving James
Gibson, C. G. (Pudsey & Otley)
Rentoul, Sir Gervais S.


Allen, Sir J. Sandeman (Liverp'l., W.)
Gower, Sir Robert
Roberts, Sir Samuel (Ecclesall)


Allen, W. E. D. (Belfast, W.)
Grattan-Doyle, Sir N.
Rodd, Rt. Hon. Sir James Rennell


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Hacking, Rt. Hon. Douglas H.
Ruggles-Brise, Lieut.-Colonel E. A.


Astor, Viscountess
Hamilton, Sir George (Ilford)
Russell, Alexander West (Tynemouth)


Atholl, Duchess of
Hammersley, S. S.
Salmon, Major I.


Atkinson, C.
Hartington, Marquess of
Samuel, A. M. (Surrey, Farnham)


Baillie-Hamilton, Hon. Charles W.
Harvey, Major S. E. (Devon, Totnes)
Sandeman, Sir N. Stewart


Beamish, Rear-Admiral T. P. H.
Haslam, Henry C.
Sassoon, Rt. Hon. Sir Philip A. G. D.


Beaumont, M. W.
Henderson, Capt. R. R. (Oxf'd, Henley)
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Berry, Sir George
Herbert, Sir Dennis (Hertford)
Smithers, Waldron


Betterton, Sir Henry B.
Hills, Major Rt. Hon. John Waller
Somerville, A. A. (Windsor)


Birchall, Major Sir John Dearman
Horne, Rt. Hon. Sir Robert S.
Southby, Commander A. R. J.


Bird, Ernest Roy
Howard-Bury, Colonel C. K.
Spender-Clay, Colonel H.


Birkett, W. Norman
Hudson, Capt. A. U. M. (Hackney, N.)
Steel-Maitland, Rt. Hon. Sir Arthur


Boothby, R. J. G.
Hurd, Percy A.
Stewart, W. J. (Belfast, South)


Bourne, Captain Robert Croft.
King, Commodore Rt. Hon. Henry D.
Stuart, Hon. J. (Moray and Nairn)


Bowater, Col. Sir T. Vansittart
Lamb, Sir J. Q.
Thomas, Major L. B. (King's Norton)


Bowyer, Captain Sir George E. W.
Lambert, Rt. Hon. George (S. Molton)
Thomson, Sir F.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Lane Fox, Col. Rt. Hon. George R.
Tinne, J. A.


Buchan, John
Law, Sir Alfred (Derby, High Peak)
Train, J.


Bullock, Captain Malcolm
Leighton, Major B. E. P.
Tryon, Rt. Hon. George Clement.


Burton, Colonel H. W.
Lewis, Oswald (Colchester)
Ward, Lieut.-Col. Sir A. Lambert


Butler, R. A.
Locker-Lampson, Rt. Hon. Godfrey
Wardlaw-Milne, J. S.


Cadogan, Major Hon. Edward
Long, Major Eric
Warrender, Sir Victor


Cayzer, Sir C. (Chester, City)
Lymington, Viscount
Waterhouse, Captain Charles


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
McConnell, Sir Joseph
Williams, Charles (Devon, Torquay)


Chadwick, Capt. Sir Robert Burton
Macquisten, F. A.
Wilson, G. H. A. (Cambridge U.)


Christie, J. A.
Margesson, Captain H. D.
Windsor-Clive, Lieut.-Colonel George


Colman, N. C. D.
Marjoribanks, E. C.
Withers, Sir John James


Courthope, Colonel Sir G. L.
Merriman, Sir F. Boyd
Wolmer, Rt. Hon. Viscount


Crichton-Stuart, Lord C.
Mitchell, Sir W. Lane (Streatham)
Womersley, W. J.


Cranborne, Viscount
Monsell, Eyres, Com. Rt. Hon. Sir B.
Wood, Rt. Hon. Sir Kingsley


Croft, Brigadier-General Sir H.
Moore, Sir Newton J. (Richmond)
Worthington-Evans, Rt. Hon. Sir L.


Crookshank, Capt. H. C.
Morrison, W. S. (Glos., Cirencester)



Dalrymple-White, Lt.-Col. Sir Godfrey
Muirhead, A. J.
TELLERS FOR THE NOES.—


Davies, Dr. Vernon
Nathan, Major H. L.
Major the Marquess of Titchfield


Davies, Maj. Geo. F. (Somerset, Yeovil)
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
and Captain Wallace.


Dugdale, Capt. T. L.
O'Connor, T. J.

The CHAIRMAN: The next Amendment I select is that in the name of the hon. Member for Chislehurst (Mr. Smithers). May I point out that there has been a wide discussion on the valuation of these assets, and I hope that the hon. Member will confine himself strictly to the Amendment?

Mr. SMITHERS: I beg to move, in page 30, line 5, to leave out the words "the value of the total assets of the company," and to insert instead thereof, the words:
ten times the income computed in accordance with the provisions of the Income Tax Acts accruing to the benefit of those shares calculated on the average of the last three accounting periods of the company completed before the date of death.
The Chancellor of the Exchequer, having
used the steam-roller of the Government majority to overcome the practical suggestions which we have made from this side, I now move this Amendment. This is an attempt to relate the valuation of the property that passes, not to the value of the total assets of the company, but to the income during the previous three years. I have put down 10 times the value, so that if the income were 10 per cent. the value would be 10 times that amount. The Chairman has said we have had a long discussion, and I want to obey his ruling, and I will not say more.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): I am afraid it is quite impossible for the Government to accept this Amendment.
Perhaps the best answer I could give to the hon. Member would be to refer him to the speech of the right hon. Member for St. George's (Sir L. Worthington-Evans) a little earlier in the debate, in which he pointed out that of the three possible methods of making the valuation that on a dividend basis would be the most unsuitable. [Interruption.] I understood the right hon. Gentleman to say that there were three possible methods by which the value could be ascertained. One was to take the market value; one was the dividend method; and one was the method suggested by this Clause. I understood the right hon. Gentleman to say the dividend method was thoroughly unsuitable.

Sir L. WORTHINGTON-EVANS: I said there were certain cases in which it would be undesirable, but I did not say it was the worst method.

Mr. PETHICK-LAWRENCE: I am sorry if I exaggerated the statement of the right hon. Gentleman, but I think in the form in which he has now put it it is an answer to the hon. Member for Chislehurst (Mr. Smithers). In cases where, owing to the peculiar character of these companies and the peculiar power of controlling them held by the deceased, it is in any way difficult to ascertain the market value of the shares, a value placed on them according to the dividends paid would not provide the correct answer. It would be possible for the company to bring down its dividends for certain purposes, and it would be quite improper to fix the value of the shares on that basis. Let me give an illustration which came under my own notice. A shipping company thought it desirable to put a very large part of its profits to reserve in order to build up a larger fleet, and in consequence it paid a very small dividend. It would be quite improper in such a case as that to suppose that the value of the shares is only to be ascertained by multiplying the dividend paid by a certain number.

Sir A. LAW: Surely that shipping company was not a private company?

Sir ASSHETON POWNALL: I think the Financial Secretary has really misunderstood or misrepresented this Amendment. It is not a question of dividends at all. We know that in many cases the dividend declared has very little relation
to the income. A company may not distribute its profits up to the hilt, or it may. This is a question of the income, and in the case mentioned by the Financial Secretary, where a company thought it necessary to put large sums to reserve, that amount would have to pay tax, and therefore would be taken to be part of the income, in accordance with the provisions of the Income Tax Acts. There might be cases, as in the case of a very old man who might be expected to die in the course of a few years, where a company might deliberately try to keep the income down in the three years before his death; but ordinarily there is no precise relation between the income of a company and the dividend it pays, and while I quite appreciate the difficulties of the Financial Secretary, the word "dividend" being there, I do submit that we get much nearer the real value of the concern if we take the income which has been made according to the very careful computation of the Income Tax Acts, because the authorities take great care that the full income shall be disclosed. There could not be a better basis than this.

Sir S. ROBERTS: I want to ask my hon. Friend the Member for Chislehurst (Mr. Smithers) not to press this Amendment, and I will give him one reason. I want him to assume the case of a company which is formed to operate a patent for seven years. In the last three years of those seven the company may make very considerable profits. If at the end of the seven years, the shareholder were to die, the value of the company would be calculated on the basis of the profits for the last three years, although the patents which had produced those profits would by that time be dead.

Major-General Sir NEWTON MOORE: I understand that under the existing law the value of shares in a company is estimated for Estate Duty purposes on the basis of market transactions at that date. I have in my mind a case where shares were valued at 21s. The total of the estate was £540,000, and the duty on it was £140,000. Arrangements were made to defer the payment of duty, because it was realised that if a large block of shares were thrown on the market the effect might be to bring the price down to 5s. [Interruption.] This is a case which actually occurred. The shares were valued at 21s. It was impossible for the
widow to pay the duty at once, and consequently she made an arrangement with the Treasury to allow the duty to stand over on a basis of 4 per cent. interest. Instead of the shares appreciating in value, however, they depreciated, with the result that the widow, who was assumed to be worth at least £10,000 or 12,000 a year, was allowed by the probate authorities only £2,000 a year at first, subsequently £400 a year, and subsequently nothing. In the end the whole of the shares were sold, and brought in £130,000. She owes £30,000 for interest. The whole of the estate has been taken over. It is absolutely a case of confiscation. I am quoting this to point out the injustice which arises at the present time, and I think we ought to be exceptionally careful in the steps taken to arrive at value. The suggestion made by an hon. Friend that the Commissioners should see what a willing purchaser would pay for the shares——

The CHAIRMAN: That point does not arise now. We have passed to another Amendment.

Mr. SMITHERS: In view of what has been said, and seeing that we wish to get on with the business, I ask permission to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir D. HERBERT: I beg to move, in page 30, line 12, to leave out from the word "if," to the end of the Clause, and to insert instead thereof the words:
such company would be deemed to be under the control of that person under Section twenty-one, Sub-section (6), of the Finance Act, 1922.
In view of the circumstances I do not propose to say very much about this Amendment, which is more or less related to an Amendment which I have put down to the next Clause. If I may be allowed to treat the two Amendments as being more or less one in this speech, it may be unnecessary for me to do more than formally move my Amendment on the next Clause. The object of this Amendment and the other one is to simplify this legislation by getting rid of the necessity for defining the exact kind of company to which this part of the Bill applies and defining what is meant by "controlling a company." I am glad the Attorney-General is back, because he will
appreciate my point. Under the Finance Act of 1922 an attempt was made for the first time to deal with the one-man company. Parliament was attempting to deal with the avoidance of payment of Super-tax by a company not distributing its income. That Measure enacted certain legislation which was to apply to what I may perhaps best describe as controlled companies of a private nature. In course of time that legislation was found to be not quite water-tight, and in 1927 the right hon. Member for Epping (Mr. Churchill), when he was Chancellor of the Exchequer, determined to make it more water-tight. After a great deal of negotiation the 1922 Act was amended by the Finance Act of 1927. The result arrived at in the Act of 1927 worked satisfactorily, I believe, from the point of view of the Revenue, with regard to the particular companies affected by that legislation. I believe I am right in saying that it has acted satisfactorily from the point of view of the stock exchanges of the country and others interested in large and important businesses and companies more or less of a private nature. In the circumstances I feel that it would simplify legislation and shorten it if we were to insert here words to say that a company should be deemed to be under the control of a person if it would be deemed to be under his control according to the Act of 1922 as amended by the Act of 1927. My later Amendment would propose——

The CHAIRMAN: The hon. Member is going on to discuss an Amendment to the next Clause. He is assuming that I am going to call it.

Sir D. HERBERT: I do not propose to discuss it, but only to show how this Amendment is to some extent inevitably linked up with the other Amendment. I will not discuss the merits of it, but the effect of it would be to refer back to the Acts of 1922 and 1927 for a definition of the company of a private nature which is deemed to be controlled. That would mean that two and a-half lines would take the place of about 15 lines. The Attorney-General has found it necessary in this Clause to define what is meant by "the control of a company" and he proposes to do so by using the word "control" twice over without defining it. A person can control a company if "he has control of more than half the voting
power of the company," by virtue of the shares which he controls. What is the meaning of control in that case? All these methods of control are contained in the Act of 1922, and if the Attorney-General thinks that there is any particular class of control not covered by these Acts I would suggest that it would be better for him to adopt the definition of control which we have in the Finance Act, 1922 and add something to it. The Attorney-General will realise that I am trying to make a contribution towards rendering this legislation watertight.

The ATTORNEY-GENERAL: Perhaps it will be convenient for me to reply at this stage. I am surprised to hear the hon. and learned Member asking the Government to insert words which would mean more legislation by reference. Here we have a case in which an hon. Member is asking for lgislation by reference to be substituted for the words in an Act of Parliament.

Sir D. HERBERT: That would be very much more simple.

The ATTORNEY-GENERAL: I am afraid that I cannot accept this Amendment. In the first place I do not like to extend the principle of legislation by reference. Secondly, it seems illogical, when dealing with a group of Clauses concerning Estate Duties, to expect anybody clearly to understand the position by referring them back to an Act of Parliament which is eight years old and deals with quite a different topic. That Act was directed to the case where control was concentrated in one or two families and was not in the hands of an individual.
Under the 1922 Act it will be found that shares held by a man's near relative are treated as shares held by him for determining control. It is wholly inappropriate where you are dealing with a question of Estate Duties to address your mind to shares held by the deceased individual's relatives. Therefore, for these reasons, quite apart from other reasons which I could give, the suggestion made by the hon. Member would not work. The circumstances are different, and in this Act we have a wider definition than that contained in the Act of 1922, in that we include under control a case where an individual has the right
or power to dispose of more than half of the income of the company. That has no counterpart in the Act of 1922. For these reasons I regret that we cannot accept the suggestion put forward by the hon. and learned Member for Watford (Sir D. Herbert).

Sir D. HERBERT: I beg to ask leave to withdraw my Amendment.
I do so with the object of saving time, but I should like to say that my reason for taking this course is that I do not think it is any use pressing the matter further. I am not convinced by the arguments of the Attorney-General, and I think I could show that they do not apply to the case which I have put before the Committee.

Amendment, by leave, withdrawn.

Sir L. WORTHINGTON-EVANS: I beg to move, in page 30, line 21, after the word "director" to insert the words:
or the right to nominate a majority of the directors or the power to veto the appointment of a director.
I move this Amendment with the intention of completing the conditions under which a person is deemed to have control of the company. I think Subsection (2, b) leaves an obvious gap, and I suggest the filling up of that gap by inserting the words of my Amendment.

Mr. PETHICK-LAWRENCE: The Chancellor of the Exchequer agrees that these words would be an advantage and he is pleased to accept this Amendment.

Amendment agreed to.

Mr. PETHICK-LAWRENCE: I beg to move, in page 30, line 22, at the beginning, to insert the word "he."
This is a purely drafting Amendment.

Sir L. WORTHINGTON-EVANS: We are now nearing the time when it was contemplated that we should finish Clauses 32 and 33. It is obvious that the Committee has been going on with the business as fast as it can, and not a minute has been wasted. A good many hon. Members on this side have abstained from moving their Amendments. There is only about one hour and a half left to dispose of Clauses 32 and 33, under the arrangement which we came to yesterday, and I suggest that that arrangement should be varied so that we can get Clause 33 before dinner and after that start with Clause 12.

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): I have no objection to acceding to an extension of time for these Clauses, and if we get through Clauses 32 and 33 by 7.30 that will leave about four and a half hours for Clause 12. As I have already indicated, I do not think that Clause 12 is very controversial, and I hope it will be passed without any very lengthy discussion. I agree that we should conclude the discussion on Clauses 32 and 33 by 7.30 and then proceed to discuss Clause 12. If we finish Clause 12 earlier than midnight perhaps we might be able to proceed with some of the other Clauses.

Sir L. WORTHINGTON - EVANS: rose——

6.0 p.m.

The CHAIRMAN: I cannot allow this discussion to continue on the Amendment. I will now put the Question on the Amendment, and, if the right hon. Gentleman desires to continue the discussion concerning how many of the new Clauses we will consider to-night he can put himself in order by moving to report Progress.

Amendment agreed to.

Sir L. WORTHINGTON-EVANS: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
I make this Motion to put myself in order, as I should like to say a word upon what the Chancellor of the Exchequer has just said. I am grateful to him for agreeing with us. It is obvious that we ought to discuss Clause 33 a little longer, and then we shall come to the postponed Clause 12. That Clause has never been read a Second time, and, therefore, there will be the Second Reading of the Clause before it goes into Committee, and I know that some of my hon. Friends want to review the provisions in regard to insurance in a Second Reading debate. That, of course, is quite right and proper. The Chancellor of the Exchequer has undoubtedly gone a long way towards meeting the objections which were raised when we discussed this matter before, but I think there are two or three Amendments which will have to be moved and discussed, and I hope that that discussion will be concluded certainly by midnight,
and before time becomes so precious as to interfere with the next day. But whether we can get on to any other new Clause or not must depend upon progress, and, while we shall not delay progress at all, I cannot say that we shall be able to get any other new Clause. There was no such stipulation yesterday; there was no suggestion that we were going to take other Clauses unless we asked the Chancellor of the Exchequer to postpone Clause 12. If we asked him to postpone Clause 12, it was understood that the other new Clauses would be dealt with, but not on the top of Clause 12. The Committee, however, is getting on very well, and I hope that it will continue to do so, and that no time will be lost. Having made these remarks, Mr. Young, as soon as you have put the Question, I shall ask leave to withdraw my Motion.

The CHAIRMAN: The Question is, "That the Chairman do report Progress, and ask leave to sit again."

Sir L. WORTHINGTON-EVANS: I beg to ask leave to withdraw my Motion.

Motion, by leave, withdrawn.

Mr. P. SNOWDEN: I beg to move, in page 30, line 24, at the end, to add the words:
(3) This section shall not apply to shares which have, within the period of twelve months immediately preceding the death of the deceased, been the subject of dealings on a recognised stock exchange in the United Kingdom or been quoted in the official list of such a stock exchange.
The purpose of this Amendment was explained by the Attorney-General in what I might almost describe as the general debate which took place earlier this afternoon, when we were discussing the valuation of securities. It was then argued that the basis of valuation should be the market value. I am going some distance towards meeting that suggestion by this Amendment, which I hope will commend itself to the Committee.

Sir H. BETTERTON: This Amendment deals, as the Chancellor of the Exchequer has said, with the point that I raised earlier in the afternoon. It does not, of course, go so far as we should have wished, since the exception is limited to shares in which there have been dealings on a stock exchange within the 12 months preceding the death; but, inasmuch as the Amendment is an
instalment of what we asked, and the Chancellor of the Exchequer has met us to some small extent, we accept the Amendment.

Amendment agreed to.

Motion made, and Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided: Ayes, 255; Noes, 139.

Division No. 408.]
AYES.
[6.6 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Hall, F. (York, W. R., Normanton)
Matters, L. W.


Adamson, W. M. (Staff., Cannock)
Hall, G. H. (Merthyr Tydvil)
Messer, Fred


Addison, Rt. Hon. Dr. Christopher
Hall, Capt. W. P. (Portsmouth, C.)
Middleton, G.


Alpass, J. H.
Hamilton, Mary Agnes (Blackburn)
Millar, J. D.


Ammon, Charles George
Hardie, George D.
Montague, Frederick


Arnott, John
Harris, Percy A.
Morgan, Dr. H. B.


Aske, Sir Robert
Hartshorn, Rt. Hon. Vernon
Morley, Ralph


Attlee, Clement Richard
Hastings, Dr. Somerville
Morris, Rhys Hopkins


Ayles, Walter
Hayes, John Honry
Morrison, Herbert (Hackney, South)


Baker, John (Wolverhampton, Bliston)
Henderson, Rt. Hon. A. (Burnley)
Morrison, Robert C. (Tottenham, N.)


Baldwin, Oliver (Dudley)
Henderson, Arthur, Junr. (Cardiff, S.)
Mort, D. L.


Barr, James
Henderson, Thomas (Glasgow)
Moses, J. J. H.


Batey, Joseph
Henderson, W. W. (Middx., Enfield)
Mosley, Lady C. (Stoke-on-Trent)


Bellamy, Albert
Herriotts, J.
Mosley, Sir Oswald (Smethwick)


Benn, Rt. Hon. Wedgwood
Hirst, G. H. (York W. R. Wentworth)
Muggeridge, H. T.


Bennett, William (Battersea, South)
Hirst, W. (Bradford, South)
Murnin, Hugh


Benson, G.
Hoffman, P. C.
Nathan, Major H. L.


Bentham, Dr. Ethel
Horrabin, J. F.
Naylor, T. E.


Bevan, Aneurin (Ebbw Vale)
Hudson, James H. (Huddersfield)
Noel Baker, P. J.


Birkett, W. Norman
Hunter, Dr. Joseph
Oldfield, J. R.


Bondfield, Rt. Hon. Margaret
Hutchison, Maj.-Gen. Sir R.
Oliver, P. M. (Man., Blackley)


Bowen, J. W.
Isaacs, George
Palin, John Henry


Bowerman, Rt. Hon. Charles W.
Jenkins, W. (Glamorgan, Neath)
Paling, Wilfrid


Brockway, A. Fenner
John, William (Rhondda, West)
Palmer, E. T.


Brooke, W.
Johnston, Thomas
Parkinson, John Allen (Wigan)


Brothers, M.
Jones, F. Llewellyn- (Flint)
Perry, S. F.


Brown, C. W. E. (Notts, Mansfield)
Jones, J. J. (West Ham, Silvertown)
Pethick-Lawrence, F. W.


Brown, Ernest (Leith)
Jones, Rt. Hon. Leif (Camborne)
Phillips, Dr. Marion


Buchanan, G.
Jones, Morgan (Caerphilly)
Pole, Major D. G.


Burgess, F. G.
Jones, T. I. Mardy (Pontypridd)
Potts, John S.


Buxton, C. R. (Yorks. W. R. Elland)
Jowett, Rt. Hon. F. W.
Price, M. P.


Caine, Derwent Hall-
Jowitt, Rt. Hon. Sir W. A.
Quibell, D. J. K.


Cameron, A. G.
Kelly, W. T.
Ramsay, T. B. Wilson


Cape, Thomas
Kennedy, Thomas
Rathbone, Eleanor


Charleton, H. C.
Kenworthy, Lt.-Com. Hon. Joseph M.
Raynes, W. R.


Chater, Daniel
Kinley, J.
Richards, R.


Church, Major A. G.
Knight, Holford
Richardson, R. (Houghton-le-Spring)


Clarke, J. S.
Lambert, Rt. Hon. George (S. Molton)
Riley, Ben (Dewsbury)


Cluse, W. S.
Lang, Gordon
Riley, F. F. (Stockton-on-Tees)


Clynes, Rt. Hon. John R.
Lathan, G.
Ritson, J.


Cocks, Frederick Seymour
Law, Albert (Bolton)
Romeril, H. G.


Compton, Joseph
Law, A. (Rosendale)
Rosbotham, D. S. T.


Cove, William G.
Lawrence, Susan
Rowson, Guy


Daggar, George
Lawrie, Hugh Hartley (Stalybridge)
Russell, Richard John (Eddisbury)


Dallas, George
Lawther, W. (Barnard Castle)
Salter, Dr. Alfred


Davies, E. C. (Montgomery)
Leach, W.
Samuel Rt. Hon. Sir H. (Darwen)


Day, Harry
Lee, Frank (Derby, N. E.)
Samuel, H. Walter (Swansea, West)


Dudgeon, Major C. R.
Lee, Jennie (Lanark, Northern)
Sanders, W. S.


Ede, James Chuter
Lees, J.
Sandham, E.


Edmunds, J. E.
Lewis, T. (Southampton)
Sawyer, G. F.


Edwards, E. (Morpeth)
Llndley, Fred W.
Scrymgeour, E.


Egan, W. H.
Lloyd, C. Ellis
Scurr, John


Elmley, Viscount
Logan, David Gilbert
Sexton, James


Evans, Capt. Ernest (Welsh Univer.)
Longbottom, A. W.
Shaw, Rt. Hon. Thomas (Preston)


Foot, Isaac
Longden, F.
Sherwood, G. H.


Freeman, Peter
Lowth, Thomas
Shield, George William


Gardner, B. W. (West Ham, Upton)
Lunn, William
Shillaker, J. F.


Gardner, J. P. (Hammersmith, N.)
Macdonald, Gordon (Ince)
Shinwell, E.


George, Megan Lloyd (Anglesea)
McElwee, A.
Short, Alfred (Wednesbury)


Gibbins, Joseph
McEntee, V. L.
Simmons, C. J.


Gibson, H. M. (Lancs, Mossley)
McGovern, J. (Glasgow, Shettleston)
Simon, Rt. Hon. Sir John


Gill, T. H.
McKinlay, A.
Sinkinson, George


Gillett, George M.
MacLaren, Andrew
Sitch, Charles H.


Glassey, A. E.
Maclean, Neil (Glasgow, Govan)
Smith, Ben (Bermondsey, Rotherhithe)


Gossling, A. G.
MacNeill-Weir, L.
Smith, Frank (Nuneaton)


Graham, D. M. (Lanark, Hamilton)
Mander, Geoffrey le M.
Smith, H. B. Lees (Keighley)


Graham, Rt. Hon. Wm. (Edin., Cent.)
Mansfield, W.
Smith, Rennie (Penistone)


Gray, Milner
March, S.
Smith, Tom (Pontefract)


Greenwood, Rt. Hon. A. (Colne)
Marcus, M.
Smith, W. R. (Norwich)


Grenfell, D. R. (Glamorgan)
Markham, S. F.
Snell, Harry


Griffith, F. Kingsley (Middlesbro' W.)
Marley, J.
Snowden, Rt. Hon. Philip


Groves, Thomas E.
Marshall, Fred
Snowden, Thomas (Accrington)


Grundy, Thomas W.
Mathers, George
Sorensen, R.


Stamford, Thomas W.
Viant, S. P.
Whiteley, William (Blaydon)


Stephen, Campbell
Walker, J.
Wilkinson, Ellen C.


Strachey, E. J. St. Loe
Wallace, H. W.
Williams, David (Swansea, East)


Strauss, G. R.
Walters, Rt. Hon. Sir J. Tudot
Williams, Dr. J. H. (Llanelly)


Sullivan, J.
Watkins, F. C.
Wilson, C. H. (Sheffield, Attercliffe)


Sutton, J. E.
Watson, W. M. (Dunfermline)
Wilson, J. (Oldham)


Taylor, R. A. (Lincoln)
Wellock, Wilfred
Wilson, R. J. (Jarrow)


Thomas, Rt. Hon. J. H. (Derby)
Welsh, James (Paisley)
Winterton, G. E. (Leicester, Lough D'gh)


Toole, Joseph
Welsh, James C. (Cuatbridge)
Wise, E. F.


Tout, W. J.
West, F. R.
Wood, Major McKenzie (Banff)


Townend, A. E.
Westwood, Joseph



Turner, B.
White, H. G.
TELLERS FOR THE AYES.—


Vaughan, D. J.
Whiteley, Wilfrid (Birm., Ladywood)
Mr. Charles Edwards and Mr. A.




Barnes.


NOES.


Acland-Troyte, Lieut-Colonel
Falle, Sir Bertram G.
O'Connor, T. J.


Albery, Irving James
Fermoy, Lord
O'Neill, Sir H.


Allen, Sir J. Sandeman (Liverp'l., W.)
Fielden E. B.
Ormsby-Gore, Rt. Hon. William


Allen, W. E. D. (Belfast, W.)
Forestier-Walker, Sir L.
Peake, Capt. Osbert


Amery, Rt. Hon. Leopold C. M. S.
Galbraith, J. F. W.
Penny, Sir George


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Ganzoni, Sir John
Percy, Lord Eustace (Hastings)


Astor, Viscountess
Gibson, C. G. (Pudsey & Otley)
Pownall, Sir Assheton


Atholl, Duchess of
Gower, Sir Robert
Ramsbotham, H.


Atkinson, C.
Grattan-Doyle, Sir N.
Reid, David D. (County Down)


Baldwin, Rt. Hon. Stanley (Bewdley)
Greaves-Lord, Sir Walter
Remer, John R.


Berry, Sir George
Gretton, Colonel Rt. Hon. John
Rentoul, Sir Gervais S.


Betterton, Sir Henry B.
Guinness, Rt. Hon. Walter E.
Roberts, Sir Samuel (Ecclesall)


Birchall, Major Sir John Dearman
Hacking, Rt. Hon. Douglas H.
Rodd, Rt. Hon. Sir James Rennell


Bird, Ernest Roy
Hamilton, Sir George (Ilford)
Ruggles-Brise, Lieut.-Colonel E. A.


Boothby, R. J. G.
Hartington, Marquess of
Russell, Alexander West (Tynemouth)


Bourne, Captain Robert Croft
Harvey, Major S. E. (Devon, Tothes)
Salmon, Major I.


Bowyer, Captain Sir George E. W.
Haslam, Henry C.
Samuel, A. M. (Surrey, Farnham)


Bracken, B.
Henderson, Capt. R. R. (Oxf'd, Henley)
Sandeman, Sir N. Stewart


Braithwaite, Major A. N.
Herbert, Sir Dennis (Hertford)
Sassoon, Rt. Hon. Sir Philip A. G. D.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hills, Major Rt. Hon. John Waller
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Buchan, John
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Smith-Carington, Neville W.


Bullock, Captain Malcolm
Horne, Rt. Hon. Sir Robert S.
Smithers, Waldron


Butler, R. A.
Howard-Bury, Colonel C. K.
Somerville, A. A. (Windsor)


Cadogan, Major Hon. Edward
Hudson, Capt. A. U. M. (Hackney, N.)
Southby, Commander A. R. J.


Cayzer, Sir C. (Chester, City)
Hurd, Percy A.
Spender-Clay, Colonel H.


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Iveagh, Countess of
Stanley, Lord (Fylde)


Chadwick, Capt. Sir Robert Burton
King, Commodore Rt. Hon. Henry D.
Steel-Maitland, Rt. Hon. Sir Arthur


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Knox, Sir Alfred
Stuart, Hon. J. (Moray and Nairn)


Chamberlain, Rt. Hon. N. (Edgbaston)
Lamb, Sir J. Q.
Train, J.


Christie, J. A.
Lane Fox, Col. Rt. Hon. George R.
Tryon, Rt. Hon. George Clement.


Churchill, Rt. Hon. Winston Spencer
Law, Sir Alfred (Derby, High Peak)
Ward, Lieut.-Col. Sir A. Lambert


Colman, N. C. D.
Leighton, Major B. E. P.
Wardlaw-Milne, J. S.


Colville, Major D. J.
Lewis, Oswald (Colchester)
Warrender, Sir Victor


Courthope, Colonel Sir G. L.
Llewellin, Major J. J.
Waterhouse, Captain Charles


Crichton-Stuart, Lord C.
Locker-Lampson, Rt. Hon. Godfrey
Williams, Charles (Devon, Torquay)


Cranborne, Viscount
Long, Major Eric
Wilson, G. H. A. (Cambridge U.)


Croft, Brigadier-General Sir H.
Lymington, Viscount
Windsor-Clive, Lieut.-Colonel George


Crookshank, Capt. H. C.
Macquisten, F. A.
Winterton, Rt. Hon. Earl


Cunliffe-Lister. Rt. Hon. Sir Philip
Margesson, Captain H. D.
Withers, Sir John James


Dalrymple-White, Lt.-Col. Sir Godfrey
Marjoribanks, E. C.
Wolmer, Rt. Hon. Viscount


Davies, Dr. Vernon
Merriman, Sir F. Boyd
Womersley, W. J.


Davies, Maj. Geo. F. (Somerset, Yeovil)
Monsell, Eyres, Com. Rt. Hon. Sir B.
Wood, Rt. Hon. Sir Kingsley


Dawson, Sir Philip
Mobre, Sir Newton J. (Richmond)
Worthington-Evans, Rt. Hon. Sir L.


Dugdale, Capt. T. L.
Moore, Lieut.-Colonel T. C. R. (Ayr)



Edmondson, Major A. J.
Morrison, W. S. (Glos., Cirencester)
TELLERS FOR THE NOES.—


Elliot, Major Walter E.
Muirhead, A. J.
Sir Frederick Thomson and Major


Erskine, Lord (Somerset, Weston-s.-M.)
Newton, Sir D. G. C. (Cambridge)
the Marquess of Titchfield.


Everard, W. Lindsay
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)

POSTPONED CLAUSE 33.—(Interpretation.)

Amendment made: In page 30, line 28, leave out the word "Private."—[Mr. P. Snowden.]

Mr. P. SNOWDEN: I beg to move, in page 30, line 28, after the word "company," to insert the words "to which this Part of this Act applies."

Sir ARTHUR STEEL-MAITLAND: There is a point which could be raised on a later Amendment by my hon.
Friend the Member for Watford (Sir D. Herbert) if you, Sir, propose to call it. We do not want to take the discussion twice over.

The DEPUTY - CHAIRMAN: (Mr. Dunnico): I had not intended to select the hon. Member's Amendment, though I am always willing, as far as possible, to select those Amendments which have substance, and to which hon. Members attach special importance.

Sir A. STEEL-MAITLAND: Perhaps in that case my hon. Friend would prefer to make his observations on this occasion.

Sir D. HERBERT: The Chancellor of the Exchequer is now proposing to alter the wording of the definition Clause in such a way that, instead of referring to private companies all through, it refers to companies to which this part of the Act applies. I understand that that carries with it the intention that the rest of the definition of "private" company should stand as it is in the Bill. In spite of the general objections that one has to legislation by reference, if you have complicated, difficult and intricate legislation of this kind, and you have in an Act which has been in operation for some years a definition long, intricate, complicated and difficult, which no one but a lawyer could understand, but one which has been found to be watertight from the point of view of the Revenue, and not objectionable to the business community generally, I suggest that, if ever legislation by reference is justified, it is here; and, after all, I doubt whether it is in a true or objectionable sense of the term legislation by reference simply to refer back to a definition of a particular type of company in a previous Act.
The whole language of our Acts of Parliament, in order to be understood and construed, requires a knowledge of the meaning of a number of words, and a large number of those words, which are included in all Acts of Parliament, have some kind of recognised definition, statutory or otherwise, some of them under the Interpretation Act, and, therefore, I do not think in this case the gibe of the Attorney-General at our having ventured to suggest legislation by reference has any foundation. On the other hand, I know that the Attorney-General desires to make this legislation as little intricate and difficult as possible, and, although the Finance Acts of 1922 and 1927 were directed to dealing with evasion of Surtax, while this Bill is directed to the evasion of Death Duties, that is no reason why we should not have the same definition of a controlled company of a private nature when you have a definition of the same subject in a previous Act. You would have the advantage of a definition which has been acted upon for some
years, and there would, therefore, not be the liability to go to the Courts for the interpretation of an entirely new definition. Perhaps it would be permissible to refer to the words "wheresoever incorporated" unless you, Sir, are proposing to call my Amendment. If you are, I will not say anything about it now.

The DEPUTY-CHAIRMAN: The fact that I may not select certain Amendments does not entitle hon. Members to anticipate them and to discuss them on prior Amendments. The proper place to discuss any matter in an Amendment that is not selected is on the question that the Clause stand part of the Bill.

Sir D. HERBERT: I quite agree, and I will not go into it. My excuse must be that I was invited to use the Chancellor's Amendment for the purpose of saying a few words on the general definition raised by a later Amendment of my own. I suggest to the Chancellor that, following the alteration which he has made to get rid of the use of that expression "private company," which already has a statutory meaning, he should consider whether he cannot improve the Clause still more by adopting the old, well known, tried and proved definition of the particular type of company to which we want this legislation to apply.

Mr. WOMERSLEY: I should like to ask if this Amendment alters the statement made in the White Paper dealing with the Clause, that the effect of the definition inserted in the Bill is to include all private companies within the meaning of the Companies Acts? I have an Amendment to substitute "means" for "includes," and perhaps I may put a question on it if you, Sir, are not intending to call it.

The DEPUTY-CHAIRMAN: I think hon. Members are falling into a very bad habit in asking the Chair beforehand what Amendments it is going to select and what it is not. In this case I intend to call the hon. Member's Amendment.

Captain BOURNE: I think this is really a point on which we must raise the exact type of company which comes within these Clauses, and we must know, before we part from this Clause, exactly what companies are coming in. I am advised that a very large company near my own constituency would come in under
this definition, "company to which this part of the Act applies." I want to know, in a case where a company issues preference shares and the founder of the company retains the ordinary shares——

Mr. LEIF JONES: On a point of Order. I submit that this method of procedure is making the Clause very confusing. This is only a consequential Amendment on alterations made in Clauses 29 and 32.

Mr. O'CONNOR: Is not the hon. Member missing the point? We are dealing with a group of Clauses which were originally headed "private companies," because they dealt with companies defined in Clause 33 as private companies. The Chancellor of the Exchequer has struck out the word "private," and now the Clauses are to deal, not only with all companies that are known to the law, but, in addition, with certain other companies which are included in the sub-definition in this Clause. I submit that my hon. and gallant Friend was in order in making the point he was making. Ought we not to have an explanation from the Chancellor of the Exchequer as to whether he is going to substitute the word "means" for the word "includes"?

Mr. LEIF JONES: Further to my point of Order. I submit that the point which the hon. Member has made really does not answer my point. What the phrase "company to which this Act applies" means includes or affects, we do not know at all until we come to the further words of the Clause. What we have to define is the company to which this Act applies, and I do not think that we ought to go into the further provisions of the Clause.

Sir A. STEEL-MAITLAND: May I make a suggestion so that we may not waste time over points of Order? We want to give the Chancellor of the Exchequer his Clause within the time stated and do not want to waste time unduly. If we could have an expression of his intention, perhaps we could condense the discussion of what should come under the Clause in the light of the expression of his intention. That would, I think, shorten our discussion very considerably.

Mr. P. SNOWDEN: If I may be permitted to strain the rules of order in
order to facilitate business, I do not hesitate to do so. I understand that the Committee want to know whether I am prepared to consent to the next Amendment on the Paper to which the name of the hon. Member for Grimsby (Mr. Womersley) is attached, namely, to leave out the word "includes" and to insert instead thereof the word "means." Is that what the right hon. Gentleman means?

Sir A. STEEL-MAITLAND: Yes.

Mr. SNOWDEN: I am prepared to accept that Amendment.

Amendment agreed to.

Mr. WOMERSLEY: I beg to move, in page 30, line 28, to leave out the word "includes," and to insert instead thereof the word "means."
As the Chancellor of the Exchequer has notified that he is going to accept the Amendment, it does not require that I should argue the need for its acceptance.

Amendment agreed to.

Sir B. MERRIMAN: I beg to move, in page 30, line 31, to leave out from the word "thereof," to the end of line 34.
The point of this Amendment is to obtain some elucidation as to what is aimed at by this definition of company. The test in the first paragraph (ii) of this Clause is that the company:
has not issued to the public more than half of the shares by the holders whereof it is controlled.
I would ask the Attorney-General to consider whether that is a definition which really elucidates the matter at all? I invite his attention to the fact that in the Companies Act itself there is no definition of the word "public," and that in the Companies Act itself the word is used in different senses in different Sections. And it may or may not include, for example, existing members of a company or existing debenture holders of a company; it may or may not include a very limited class of persons who happen to be members of the public; and it may or may not include even a single person according to the circumstances of the particular case. Without going into elaborate details, that is the effect of the review of the exisitng state of the law which is given in a well known text book
with which both the learned Attorney-General and I are familiar. Is it Wise in those circumstances to leave the vital definition on which the whole of this set of Clauses hangs in a fashion so nebulous as that?
Let me Point out to the learned Attorney-General that you are now adding a third definition in which the issue of shares to the public forms a part. Under the Finance Act, 1922, in connection with the Income Tax, the test is:
which has not issued any of its shares as a result of a public invitation to subscribe for shares.
This is not necessarily the same thing as "has not made an issue of shares to the public." Under the Companies Act itself the test of a private company is that it has prohibited any invitation to the public to subscribe for shares, and now you are adding yet a third test, that it does, in fact, issue shares to the public although the public is nowhere defined. I suggest that, having regard to all the implications which hang upon this definition, it is absolutely vital that something more precise than that should be arrived at. I should also like to put this point to the learned Attorney-General. The crucial time when it really matters whether a company is or is not within the definition in this Clause is the time of the original transfer. We tried to get an Amendment accepted that the character of the company had to remain the same throughout the whole transaction, that it had to be a com-company as defined at the time the transfer was made, and that it had still to be a company within the definition at the time the benefit was received. That Amendment was rejected. The crucial point, therefore, is that if you get a transfer to a company which is a company within the meaning of this definition at the time the transfer is made, all the rest follows if the benefit is received later on, whether the company is still a company within the meaning of the definition or not.
Is it intended to catch this sort of case where the company which is in process of formation has never intended to be a company within this definition at all? It is not so constituted as not to be controlled by its shareholders; on the contrary it is constituted to give complete control to the shareholders. But at the
time the company is in process of formation, the transfer is made to it, just after its formation, but before it has completed the issue of shares which it intends to issue to the public. Is it intended, although things go on in the ordinary course, and in due course, though after the transfer has been effected, the company issues to the public more than half the shares by which it is controlled as it always intended to do, that nevertheless the transaction is going to be rendered an offending transaction by the fact that the person who made the transfer is in receipt of a benefit at some date before his death and within the prescribed period. I venture to think that the learned Attorney-General—I do not expect an answer on the spur of the moment—will agree that these are matters which require very serious consideration in connection with the definition of the word "company."

Viscount WOLMER: Before the learned Attorney-General replies, may I call his attention to the case of a company in which I happen to have a few shares? The Sudan Plantations Syndicate 30 years ago had a capital of £500,000. It has had a very prosperous career and its capital is now £2,500,000. The whole of that capital has been obtained by the issue of shares to its own shareholders and not to the public. Taking a company like that, it is certainly true to say that it has not issued half the shares to the public. A great deal more than half of the shares have been issued to ordinary members during the ordinary course of the extension of the business. Do words such as these touch a company of that sort?

The ATTORNEY-GENERAL: I agree that the word "public" is a word necessarily of somewhat vague import, but there are certain contexts which give it a precise definition. After all, it is not the first time that the word "public" has been used in connection with the word "company.' In spite of the fact that the word "public" has been used, I have never heard of any extraordinary difficult arising. The Finance Act, 1927, includes the definition of company—
in which the public are substantially interested.
It is the definition which the hon. Member for Watford (Sir D. Herbert)
desired me to accept in this very Clause. The definition of a company "in which the public are substantially interested" is—again these are the essential words—that at least 25 per cent. of the voting power is at the end of the year for which the accounts of the company have been made up, beneficially held by the public. That is the Act of 1927, with which the hon. and learned Gentleman was, no doubt, equally concerned. At any rate, it is an Act which he will not desire to criticise too adversely, nor do I. As far as I know, it has worked well. In short, it is always difficult to attempt a definition with regard to a subject matter which we must know in the last resort involves a question of degree. I cannot do it.
The question of degree is a question of fact and the Commissioners, as I have said before, would be a very competent body of men trained in business methods entitled to determine and adjudge whether on the given facts of a given case the circumstances, and the extent and the degree of the issue, did or did not constitute, an issue to the public. With regard to the other point which the hon. and learned Member put to me—a fine and ingenious point—he was good enough to say that he did not expect an answer on the spur of the moment, and I should certainly like to consider it. I understand that the point is this. Here you have a company which always intends to issue to the public the whole of its shares, but immediately the company is incorporated, say the day after the company is incorporated, and before it has had time to make its issue, the transfer is made to it, is it or is it not a company to which the Act is applied?

Sir B. MERRIMAN: For all time.

The ATTORNEY-GENERAL: The hon. and learned Member was good enough to say that I should not give an answer on the spur of the moment. I shall certainly think over the matter in the still watches of the night before I give an answer. Obviously, we do not mean to hit that company. The effect of leaving out those words would be that we should limit the company to a company which is so constituted as not to be controlled by its shareholders or by any class thereof. The class of company which I have very much in mind—I must not say too much—and which I have come across in litiga-
tion, is a company which has, perhaps, a very large amount of preference shares and a very large amount of ordinary shares, possibly running into even £1,000,000. It is controlled as far as voting power is concerned by what are called management shares—four or eight management shares. It is obvious that that company ought to be brought in. That is manifestly the sort of company to which we want to apply our Measure. The Amendment would confine the definition of a private company to one that:
is so constituted as not to be controlled by its shareholders or by any class thereof.
Here is a company which is controlled by one class of shareholder, to wit, management shares. I can anticipate at this point a question which the hon. and gallant Member for Oxford (Captain Bourne) is going to ask me. He puts a hypothetical case of a company which has a large amount of preference shares issued to the public, while its block of ordinary shares are held by one individual and the voting power rests with the ordinary shares. I presume that the preference shares have no voting power unless there is default. That company would be caught, because it has not issued to the public more than half of the shares by which it is controlled. It is controlled by the holder of its ordinary shares and it has not issued to the public more than half those shares. The case which the Noble Lord put to me seems again to involve a question of degree. Degree is always a question of fact and not of law, and one which the commissioners would have to decide, but I would not like to pronounce a definite opinion upon the case which he raised before I had a clear apprehension of the facts.

Major HILLS: May I suggest that a good deal of difficulty in connection with this Clause arises from the use of the word "issued"? Take the case of a company with existing shareholders, which wants to raise more capital. It has two courses before it when it issues new shares, courses which are quite distinct and separate in the mind of any business man. Does it issue its shares to the public or issue them to existing shareholders? Surely, the court which may be called upon to give an interpretation would accept the ordinary meaning of an
issue to the public as ruling out an issue to existing shareholders. I think the Attorney-General will agree that in the strict business acceptance of an issue of new capital, an issue to the public is quite a different thing from an issue to existing shareholders, and yet there is no mischief in an issue to existing shareholders. Many large, reputable and leading companies, with a fine record behind them, take that course of raising new capital. I do not think that they should be caught by this Sub-section. Of course, my opinion on a point of law is not worth much in comparison with that of the Attorney-General, and I do not ask for an answer now, but will he look into the point? I believe we all mean the same thing.

Sir A. STEEL-MAITLAND: I am not quite certain whether the company mentioned by my noble Friend the Member for Aldershot (Viscount Wolmer) was not a private company at the outset. It is quite possible that you may have a company which was a private company at the start, and you may have some of these shares afterwards transferred and beneficially owned by a large number of persons, and where an issue of new shares to existing shareholders would still not be an issue to the public. We would like the Attorney-General to look into this matter carefully. In regard to the case that he mentioned, perhaps that ought to be a company within the meaning of this Clause. At the same time, I wonder whether it would not be possible to accept the suggestion in the Amendment, which was not moved, which stands in the name of the hon. Member for Watford (Sir D. Herbert)—in page 30, line 28, leave out from the word "includes," to end of line 34, and insert instead thereof:
any company not being a company in which the public are substantially interested as defined by Section thirty-one of Subsection (3), of the Finance Act, 1927.
That would mean that instead of accepting paragraph (ii) we could accept the definition given in Section 31 (3) of the Finance Act, 1927.

Mr. O'CONNOR: The Attorney-General must have swallowed so much of his legal self-respect in accepting these monstrous Clauses that perhaps it would not be too much to ask him, even
at this last moment, to reconsider this definition of a company, upon which the whole of the Clauses hinge. This is just another instance of how utterly futile and fatuous these Clauses are in their inception and in the method of carrying them out. In order to devise the method at which the Chancellor of the Exchequer is aiming, they have had to adopt a perfectly casual and unreasonable method of computing assets, and now they are introducing into our language a new definition of what is a public company. That is not the definition of the law at the present time. They are threatening a large number of companies of a kind which are increasingly coming into existence, the type of company which is not mainly controlled by the public, and which has not issued more than half of its shares to the public. There is a great tendency to form these companies to-day. More and more we are moving in the direction of public utility companies, where the shareholder does not control the company. The Government are sweeping these companies within the ambit and definition of this Clause. In order to catch an infinitesimally small number of companies they are bringing within the survey of the Treasury review not only a vast number of companies that exist at the present time, but also a vast number of companies such as are defined by this Clause. This is only another example of the ludicrous limits to which the Treasury is prepared to go, and the wide extension of bureaucratic powers which it is giving in order to catch a very few people. I hope that even at this late time the Attorney-General—whose acceptance of these Clauses shows either that he has not shown very much of that legal acumen which he possesses or that he is prepared to subordinate it to his neighbour on the Treasury bench—will reconsider the matter and not alter the whole definition of companies.

The ATTORNEY-GENERAL: I should like to have the opportunity at once of saying something in reply to the hon. and learned Member who has just made an accusation against me. I regard what he has said as an accusation. I regard it as my duty as Attorney-General to advise the Committee upon points of law that are put to me, and it is clearly my duty
to advise the Committee as best I can. I can honestly say, and I think the Committee will agree with me, that although I have made mistakes—no doubt I have made mistakes in some of the answers which I have given; I am conscious of one, which I will take the opportunity of correcting—I have done my best in the advice that I have given, and I resent the accusation that I have swallowed my legal self-respect, and have not given the Committee the benefit of the legal acumen which I am supposed to possess. I do resent that accusation. I have advised the Committee to the best of my ability.

Mr. O'CONNOR: If my words conveyed the impression that I meant to say that of the Attorney-General, I withdraw them without any reservation whatsoever. That was not what I meant. What I did mean was that the learned Attorney-General had some responsibility for allowing the Government to accept this particular method of catching the type of tax evader we all want to catch. That was all that I meant. My reference was to the method.

The ATTORNEY-GENERAL: I accept without the smallest hesitation what my hon. and learned Friend has been good enough to say. I felt sure that he did not mean what I think was the only meaning which his words seemed to convey. I am anxious not to mislead the Committee by holding out false hopes. If I may use a legal phrase I would say, "entirely without prejudice" I will look into this matter, but I do not want to be understood as holding out any hope or giving the remotest shadow of promise that any alteration will be made.

Major NATHAN: Arising out of what was said by the hon. Member for Central Nottingham (Mr. O'Connor) I should like to assure the Attorney-General, although I think the assurance is not necessary, that on my own behalf and on behalf of my colleagues we have taken a considerable part in the proceedings—we have a keen appreciation of the courtesy and assistance which has been extended to us not only by the Attorney-General but by the Chancellor and the Financial Secretary to the Treasury. Throughout these discussions since we began the debate on Clause 29, such intervention as I have made has been to direct attention not to the taxpayer
but to the innocent company that might find itself in a difficulty by reason of these provisions. I wonder whether the Government have fully appreciated the range of companies covered by this definition. The White Paper points out that it includes all private companies within the meaning of the Companies Acts, and also public companies which are under the control of a limited number of persons. I think a more apt definition or a clearer definition would have been all corporations, wheresoever incorporated, except those which have made a public issue of 50 per cent. of their controlling shares. The definition really goes much further than that. The Government are unable to tell us to how many companies incorporated under the Companies Acts this provision applies. I asked a question on the 19th June of the President of the Board of Trade, and he said quite frankly that the Government were unable to say how many companies were affected, but he gave this remarkable information that of 110,000 companies registered, 91,000 are private companies.
7.0 p.m.
In addition to those 91,000 there are a very large number of public companies which come within this provision, and I do not think it would be an exaggeration to say that of all the companies incorporated in this country, with a capital involving something in the neighbourhood of £5,000,000,000—I am quoting from the 38th General Annual Report of the Board of Trade for 1929—over £1,500,000,000, approaching £2,000,000,000 of Capital, is covered by these provisions. That is a very large figure; over one-third of the total capital embarked in company enterprises throughout this country. The definition goes very much further. I wonder if hon. Members opposite appreciate that it includes every co-operative society. Do they appreciate that it includes, if not all, at any rate a very large number of public utility societies, not only registered here but elsewhere. I want to address a question to the Treasury. I should like to know the view of the Secretary of State for the Dominions with regard to this proposal. What, for instance, is Canada or South Africa going to say with regard to a tax imposed upon companies, it may be, in respect of transactions which took place there by persons who were nationals of that country and
not of this country at all? Yet, under this Clause and definition, if a domiciled Canadian, having entered into a transaction perfectly lawful by the law of the land in which he lives, comes over here and acquires an English domicile, then a Canadian company would become liable in respect of a Canadian transaction relating to Canadian property entered into with a Canadian subject which was perfectly lawful and without any suspicion at the time, and would find itself liable to taxation in this country in respect to Death Duties. What will the Government representatives of Canada, South Africa and Australia say about that at the time of the Imperial Conference? It is all very well to talk about the bonds binding the Empire together——

The DEPUTY-CHAIRMAN: The hon. Member is really getting very far afield from the Amendment before the Committee.

Major NATHAN: I am only too anxious not to go too far afield, but I would point out that the public companies incorporated to here and public companies wheresoever they are incorporated are included, and it is not only within the bounds of the Empire but throughout the world that it is now suggested for the first time the writ of a King of England is to run. It is a novel proposition, and is entirely contrary to all the canons of international law. It has been laid down again and again that one country will not pay attention in its courts of justice to the revenue laws of another. It was only in 1928 that the Queen of Holland came here, submitted to the jurisdiction of the courts of this country, and said, "I claim Death Duties in Holland from a subject, a person who is liable in Holland but who is within the jurisdiction of the British Courts." Mr. Justice Tomlin, as he then was, giving judgment in that case, said, "We cannot recognise a claim like this. It is contrary to the whole course of legal history of this country for upwards of 200 years." There is another consideration which I should ask the Chancellor of the Exchequer to take into account in dealing with this matter. Is it wise and dignified that the British House of Commons should pass into law penal provisions which are incapable of fulfilment or may very well
be incapable of enforcement? Let me take the case of France, a company registered in France, property situated in France, and a French subject. He sells this property in France under conditions which under the provisions of this Bill would be an offending transaction. He comes over here, a foreigner seeking the hospitality of these shares, establishes a domicile here and dies here. That French company is then automatically under an obligation here to make a return, and, furthermore, is liable to pay duties here. I ask the Attorney-General how it is suggested that these penal provisions, these taxing provisions, should be made enforceable against those who owe no allegiance to this country, who are not within the jurisdiction and who by all the canons of international law are exempt from taxation liability or submission to a jurisdiction to which they are not subject?

Sir BASIL PETO: I am encouraged by what the right hon. Gentleman said last to make one observation. He said he would be prepared to consider the matter between now and Report stage. Earlier in his previous speech he pointed out why this second paragraph was necessary, and said that it was to enable the Treasury to get the class of company which escaped from the first paragraph and which it was their object to catch. Is it wise to put this tax on a bona fide class of company that you do not want to catch but which has not issued to the public more than half its shares? I take the case of a company I have known for 40 years which has always made it a principle that it does not issue its ordinary stock to the public but to those who have the management of its affairs, so that those who have the management of the company should take the risk of their own doings, whether good or bad. I suggest that that is not a principle of company administration to be held up—I will not say to scorn—as something inferior in morality to the ordinary company which issues its prospectus when it has no record of past business to assure the public, puts in a lot of flowery language about what it is going to do and gets the public to subscribe 80 or 90 per cent. of its ordinary capital.
That is the kind of company you want to get and not the frugally-managed com-
pany which has always allowed its preference stock to be subscribed by a public because it is safe and which has always issued its ordinary stock to those who, in a greater or less degree, are responsible for the management of a company. I do not think that the question whether a company does or does not issue 50 per cent. of its ordinary capital to the public is a wise definition to put in here. I can quite understand the first paragraph which refers to companies not to be controlled by their shareholders, but, if anything further than that is needed, I do not think it should be on the lines of making it the test whether or not more than half the ordinary capital has been issued to the public.

Mr. SMITHERS: I want briefly to put two points. The first concerns the question of issuing shares to the public. When an issue is made to existing shareholders, can it be said that they are members of the public? In the company I have in mind the issue was made to the existing

shareholders. Secondly, take the case of a company, which comes under the provisions of this Clause and which wants to increase its capital for the purpose of developing land for building or some other purpose, and does indeed make a public issue but the public for some reason do not take up that issue and, as often happens, the directors and their friends, the controllers of the company, find the money out of their private resources to take up these shares. Would that mean that they have not issued to the public more than half the shares of the company although there has been a sincere attempt to issue the shares, and the public for some reason did not take them up? Would that come under this definition?

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 261; Noes, 131.

Division No. 409.]
AYES.
[7.12 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Cove, William G.
Hirst, W. (Bradford, South)


Adamson, W. M. (Staff., Cannock)
Daggar, George
Hoffman, P. C.


Aitchison, Rt. Hon. Craigle M.
Dallas, George
Horrabin, J. F.


Alpass, J. H.
Day, Harry
Hudson, James H. (Huddersfield)


Ammon, Charles George
Dudgeon, Major C. R.
Hunter, Dr. Joseph


Arnott, John
Ede, James Chuter
Isaacs, George


Aske, Sir Robert
Edmunds, J. E.
Jenkins, W. (Glamorgan, Neath)


Attlee, Clement Richard
Edwards, C. (Monmouth, Bedwellty)
John, William (Rhondda, West)


Ayles, Walter
Edwards, E. (Morpeth)
Johnston, Thomas


Baker, John (Wolverhampton, Bilston)
Egan, W. H.
Jones, F. Llewellyn- (Flint)


Baldwin, Oliver (Dudley)
Elmley, Viscount
Jones, J. J. (West Ham, Silvertown)


Barnes, Alfred John
Foot, Isaac
Jones, Rt. Hon. Leif (Camborne)


Barr, James
Forgan, Dr. Robert
Jones, Morgan (Caerphilly)


Batey, Joseph
Freeman, Peter
Jones, T. I. Mardy (Pontypridd)


Beckett, John (Camberwell, Peckham)
Gardner, B. W. (West Ham, Upton)
Jowett, Rt. Hon. F. W.


Bellamy, Albert
Gardner, J. P. (Hammersmith, N.)
Jowitt, Rt. Hon. Sir W. A.


Benn, Rt. Hon. Wedgwood
George, Megan Lloyd (Anglesea)
Kelly, W. T.


Bennett, Capt. Sir E. N. (Cardiff C.)
Gibbins, Joseph
Kennedy, Thomas


Bennett, William (Battersea, South)
Gibson, H. M. (Lancs, Mossley)
Kenworthy, Lt.-Com. Hon. Joseph M.


Benson, G.
Gill, T. H.
Kinley, J.


Bentham, Dr. Ethel
Glassey, A. E.
Knight, Holford


Bevan, Aneurin (Ebbw Vale)
Gossling, A. G.
Lambert, Rt. Hon. George (S. Molton)


Birkett, W. Norman
Graham, D. M. (Lanark, Hamilton)
Lang, Gordon


Bowen, J. W.
Graham, Rt. Hon. Wm. (Edin., Cent.)
Lansbury, Rt. Hon. George


Bowerman, Rt. Hon. Charles W.
Gray, Milner
Lathan, G.


Brockway, A. Fenner
Greenwood, Rt. Hon. A. (Coine)
Law, Albert (Bolton)


Brooke, W.
Grenfell, D. R. (Glamorgan)
Law, A. (Rosendale)


Brothers, M.
Griffith, F. Kingsley (Middlesbro' W.)
Lawrence, Susan


Brown, C. W. E. (Notts, Mansfield)
Groves, Thomas E.
Lawrie, Hugh Hartley (Stalybridge)


Brown, Ernest (Leith)
Grundy, Thomas W.
Lawson, John James


Buchanan, G.
Hall, F. (York, W. R., Normanton)
Lawther, W. (Barnard Castle)


Burgess, E. G.
Hall, G. H. (Merthyr Tydvil)
Leach, W.


Burgin, Dr. E. L.
Hall, Capt. W. R. (Portsmouth, C.)
Lee, Frank (Derby, N. E.)


Buxton, C. R. (Yorks. W. R. Elland)
Hamilton, Mary Agnes (Blackburn)
Lee, Jennie (Lanark, Northern)


Caine, Derwent Hall-
Hardie, George D.
Lees, J.


Cameron, A. G.
Harris, Percy A.
Lewis, T. (Southampton)


Cape, Thomas
Hartshorn, Rt. Hon. Vernon
Lindley, Fred W.


Charleton, H. C.
Hastings, Dr. Somerville
Logan, David Gilbert


Chater, Daniel
Haycock, A. W.
Longbottom, A. W.


Church, Major A. G.
Hayes, John Harvey
Longden, F.


Clarke, J. S.
Henderson, Arthur, Junr. (Cardiff, S.)
Lowth, Thomas


Cluse, W. S.
Henderson, Thomas (Glasgow)
Lunn, William


Clynes, Rt. Hon. John R.
Henderson, W. W. (Middx., Enfield)
Macdonald, Gordon (Ince)


Cocks, Fredrick Seymour
Herriotts, J.
MacDonald, Malcolm (Bassetlaw)


Compton, Joseph
Hirst, G. H. (York W. R. Wentworth)
McElwee, A.


McEntee, V. L.
Pethick-Lawrence, F. W.
Smith, W. R. (Norwich)


McGovern, J. (Glasgow, Shettleston)
Phillips, Dr. Marion
Snell, Harry


McKinlay, A.
Pole, Major D. G.
Snowden, Rt. Hon. Philip


Maclean, Sir Donald (Cornwall, N.)
Potts, John S.
Snowden, Thomas (Accrington)


Maclean, Neil (Glasgow, Govan)
Price, M. P.
Sorensen, R.


MacNeill-Weir, L.
Quibell, D. J. K.
Stamford, Thomas W.


Mander, Geoffrey le M.
Ramsay, T. B. Wilson
Stephen, Campbell


Mansfield, W.
Rathbone, Eleanor
Strauss, G. R.


March, S.
Raynes, W. R.
Sullivan, J.


Marcus, M.
Richards, R.
Sutton, J. E.


Markham, S. F.
Richardson, R. (Houghton-le-Spring)
Taylor, R. A. (Lincoln)


Marley, J.
Riley, Ben (Dewsbury)
Thomas, Rt. Hon. J. H. (Derby)


Marshall, Fred
Riley, F. F. (Stockton-on-Tees)
Thurtle, Ernest


Mathers, George
Ritson, J.
Tinker, John Joseph


Matters, L. W.
Romeril, H. G.
Toole, Joseph


Maxton, James
Rosbotham, D. S. T.
Tout, W. J.


Messer, Fred
Rowson, Guy
Townend, A. E.


Middleton, G.
Russell, Richard John (Eddisbury)
Turner, B.


Millar, J. D.
Salter, Dr. Alfred
Vaughan, D. J.


Milner, Major J.
Samuel Rt. Hon. Sir H. (Darwen)
Viant, S. P.


Montague, Frederick
Samuel, H. Walter (Swansea, West)
Walkden, A. G.


Morgan, Dr. H. B.
Sanders, W. S.
Walker, J.


Morley, Ralph
Sandham, E.
Wallace, H. W.


Morris, Rhys Hopkins
Sawyer, G. F.
Watkins, F. C.


Morrison, Herbert (Hackney, South)
Scrymgeour, E.
Watson, W. M. (Dunfermline)


Morrison, Robert C. (Tottenham, N.)
Scurr, John
Wellock, Wilfred


Mort, D. L.
Sexton, James
Welsh, James (Paisley)


Moses, J. J. H.
Shaw, Rt. Hon. Thomas (Preston)
Welsh, James C. (Coatbridge)


Mosley, Lady C. (Stoke-on-Trent)
Sherwood, G. H.
West, F. R.


Mosley, Sir Oswald (Smethwick)
Shield, George William
Westwood, Joseph


Muff, G.
Shiels, Dr. Drummond
White, H. G.


Muggeridge, H. T.
Shillaker, J. F.
Whiteley, Wilfrid (Birm., Ladywood)


Murnin, Hugh
Shinwell, E.
Wilkinson, Ellen C.


Nathan, Major H. L.
Short, Alfred (Wednesbury)
Williams, David (Swansea, East)


Naylor, T. E.
Simmons, C. J.
Williams, Dr. J. H. (Llanelly)


Newman, Sir R. H. S. D. L. (Exeter)
Simon, E. D. (Manch'ter, Withington)
Wilson, C. H. (Sheffield, Attercliffe)


Noel Baker, P. J.
Sinkinson, George
Wilson, J. (Oldham)


Oldfield, J. R.
Sitch, Charles H.
Wilson, R. J. (Jarrow)


Oliver, P. V. (Man., Blackley)
Smith, Ben (Bermondsey, Rotherhithe)
Winterton, G. E. (Leicester, Loughb'gh)


Palin, John Henry
Smith, Frank (Nuneaton)
Wood, Major McKenzie (Banff)


Paling, Wilfrid
Smith, H. B. Lees (Keighley)



Palmer, E. T.
Smith, Rennie (Penistone)
TELLERS FOR THE AYES.—


Perry, S. F.
Smith, Tom (Pontefract)
Mr. Allen Parkinson and Mr.




William Whiteley.


NOES.


Acland-Troyte, Lieut.-Colonel
Dixon, Captain Rt. Hon. Herbert
Lewis, Oswald (Colchester)


Albery, Irving James
Dugdale, Capt. T. L.
Llewellin, Major J. J.


Allen, Sir J. Sandeman (Liverp'l., W.)
Edmondson, Major A. J.
Locker-Lampson, Rt. Hon. Godfrey


Allen, W. E. D. (Belfast, W.)
Erskine, Lord (Somerset, Weston-s.-M.)
Lymington, Viscount


Amery, Rt. Hon. Leopold C. M. S.
Everard, W. Lindsay
Macquisten, F. A.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Falle, Sir Bertram G.
Marjoribanks, E. C.


Atholl, Duchess of
Fermoy, Lord
Merriman, Sir F. Boyd


Atkinson, C.
Fielden E. B.
Moore, Sir Newton J. (Richmond)


Baillie-Hamilton, Hon. Charles W.
Ford, Sir P. J.
Moore, Lieut.-Colonel T. C. R. (Ayr)


Baldwin, Rt. Hon. Stanley (Bewdley)
Forestier-Walker, Sir L.
Morrison, W. S. (Glos., Cirencester)


Balfour, George (Hampstead)
Galbraith, J. F. W.
Muirhead, A. J.


Bainiel, Lord
Ganzoni, Sir John
Newton, Sir D. G. C. (Cambridge)


Berry, Sir George
Glyn, Major R. G. C.
Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)


Betterton, Sir Henry B.
Gower, Sir Robert
O'Connor, T. J.


Bevan, S. J. (Holborn)
Grattan-Doyle, Sir N.
O'Neill, Sir H.


Birchall, Major Sir John Dearman
Greaves-Lord, Sir Walter
Ormsby-Gore, Rt. Hon. William


Boothby, R. J. G.
Gretton, Colonel Rt. Hon. John
Peake, Captain Osbert


Bourne, Captain Robert Croft
Guinness, Rt. Hon. Walter E.
Penny, Sir George


Bowyer, Captain Sir George E. W.
Hacking, Rt. Hon. Douglas H.
Percy, Lord Eustace (Hastings)


Bracken, B.
Hall, Lieut.-Col. Sir F. (Dulwich)
Peto, Sir Basil E. (Devon, Barnstaple)


Braithwaite, Major A. N.
Hamilton, Sir George (Ilford)
Pownall, Sir Assheton


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hartington, Marquess of
Ramsbotham, H.


Bullock, Captain Malcolm
Harvey, Major S. E. (Devon, Totnes)
Reid, David D. (County Down)


Cadogan, Major Hon. Edward
Haslam, Henry C.
Remer, John R.


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Henderson, Capt. R. R. (Oxf'd, Henley)
Rentoul, Sir Gervais S.


Cazalet, Captain Victor A.
Heneage, Lieut.-Colonel Arthur P.
Roberts, Sir Samuel (Ecclesall)


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Hennessy, Major Sir G. R. J.
Rodd, Rt. Hon. Sir James Rennell


Chamberlain, Rt. Hon. N. (Edgbaston)
Herbert, Sir Dennis (Hertford)
Salmon, Major I.


Christie, J. A.
Hills, Major Rt. Hon. John Waller
Samuel, A. M. (Surrey, Farnham)


Colman, N. C. D.
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Samuel, Samuel (W'dsworth, Putney)


Crichton-Stuart, Lord C.
Howard-Bury, Colonel C. K.
Sandeman, Sir N. Stewart


Cranborne, Viscount
Hudson, Capt. A. U. M. (Hackney, N.)
Sassoon, Rt. Hon. Sir Philip A. G. D.


Croft, Brigadier-General Sir H.
Hurd, Percy A.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Crookshank, Capt. H. C.
Iveagh, Countess of
Smith-Carington, Neville W.


Dalrymple-White, Lt.-Col. Sir Godfrey
Kindersley, Major G. M.
Smithers, Waldron


Davies, Dr. Vernon
King, Commodore Rt. Hon. Henry D.
Somerville, A. A. (Windsor)


Davies, Maj. Geo. F. (Somerset, Yeovil)
Lane Fox, Col. Rt. Hon. George R.
Somerville, D. G. (Willesden, East)


Davison, Sir W. H. (Kensington, S.)
Law, Sir Alfred (Derby, High Peak)
Southby, Commander A. R. J.


Dawson, Sir Philip
Leighton, Major B. E. P.
Spender-Clay, Colonel H.




Stanley, Lord (Fylde)
Warrender, Sir Victor
Wolmer, Rt. Hon. Viscount


Steel-Maitland, Rt. Hon. Sir Arthur
Waterhouse, Captain Charles
Womersley, W. J.


Titchfield, Major the Marquess of
Williams, Charles (Devon, Torquay)
Young, Rt. Hon. Sir Hilton


Tryon, Rt. Hon. George Clement
Windsor-Clive, Lieut.-Colonel George



Vaughan-Morgan, Sir Kenyon
Winterton, Rt. Hon. Earl
TELLERS FOR THE NOES.—


Ward, Lieut.-Col. Sir A. Lambert
Withers, Sir John James
Sir Frederick Thomson and Captain




Margesson.

Sir A. STEEL-MAITLAND: I beg to move, in page 30, line 41, at the end, to insert the words:
or at a fixed rate in conjunction with a right to some further participation in the profits.
I do not propose to take up the time of the Committee, otherwise I should have asked my friends to divide upon the principle of this Amendment. I want to draw attention as briefly as I can to it, and to demonstrate once again the absolute inapplicability of the measure of annual income which the Government have introduced in the previous Clause. Here, again, is one of the fruits of it; it has led them to make a new definition of preference shares in a way that I think has not taken place before. We have never got a definition of preference shares as "non-participating preference shares." I ask the Government to realise the illogical mess into which it leads them. If you confine the preference shares to non-participating preference shares, then what becomes of your measure of annual income? The whole basis of the idea of annual income was that you wished to arrive at the free distributable pool of income. The moment you confine your preference shares to non-participating preference shares, you make your pool too big, according to your own idea, because you leave in it dividends on participating preference shares. On the other hand, if you were not to make this definition, if you make preference shares include both participating and non-participating preference shares, then you make the pool too small, because you will have taken out of the pool free income of the company analogous to that which is distributed on ordinary shares.
That is the kind of absurdity that is reached by this conception, absolutely unreal, of annual income. I realise quite well that in devising this Clause, among all the other difficulties that are inherent in it, the framers of it had to create some unit of measurement by which to measure whether a benefit is too big or too small. This occurred to them, perhaps quite naturally as the unit they should choose.
It has already been shown in a speech yesterday by the hon. and gallant Member for North-East Bethnal Green (Major Nathan) to what absurdities it leads. Here is another absurdity. The Government can get an infinitely better measurement or yard-stick by using the earnings of the company, with a proper definition of earnings. I do not wish to take the time up any longer, but I do want to demonstrate once again the different fundamental faults of this Clause. The definition of "company" was bad, but the definition of the unit measurement of annual income puts the Clause into a worse state of unreality and inapplicability than even the definition of "company."

Amendment negatived.

Major NATHAN: I beg to move, in page 31, line 16, after the word "employés," to insert the words:
or otherwise for the benefit of them, or their dependents or relatives,
I am glad that we are about to part company with this series of Clauses, and I know the Committee will be glad, too. The Amendment I propose is with regard to the payment of pensions. It is the usual and common practice I think, indeed the invariable practice in connection with pension schemes for employés, to make provision also for their dependent relatives. My object is to bring the Clause into line with every-day practice.

Mr. P. SNOWDEN: I am prepared to accept this Amendment.

Amendment agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Viscount WOLMER: I want to say two words only on this Motion. I hope very much that the Attorney-General will reconsider the words of this Clause between now and the Report stage. We have had no sort of reply from the Treasury Bench to the very forcible and cogent speech of the hon. and gallant Member for North-East Bethnal Green (Major Nathan). When the commercial
community outside realises that this Bill brings into its scope something like 100,000 companies including some of the biggest and most important companies in the country, that every company which has issued more than half its capital to its own shareholders or to its own employés, every gas company, every public utility company, is brought into the scope of this Bill, then I think that the commercial community will have something to say to the Government about it. I would protest, that such treatment of the most important parts of our business machinery will have very serious effects in weakening confidence in the country and in making it increasingly difficult for business to be carried on. The Government have already done a good deal to weaken confidence, and the results are reflected in a large extent in our unemployment returns. What the Government have been doing by this Clause adds further to that tendency. It will tend to increase the difficulties of industry, to add to unemployment and to add also to the discredit into which the Government are falling.

Captain BOURNE: Earlier in the evening the Attorney-General anticipated a question which I put to him. I expected the answer he gave; but it does not make me regard this Clause as being less evil in its effects than I considered it to be. Under Clause 31 the liability to Death Duty is placed on the company. That is my protest against the whole of these Clauses. The kind of company I have in mind is one which is doing useful work and employing hundreds of people. Why on earth should it be liable to Death Duties? I do not want the principal shareholder to get off the payment of the duty, but why should the liability be placed upon the company? It might land it in the Bankruptcy Court, or cause it to shut down much of its activities and throw hundreds of men cut of employment. These Clauses are ill-conceived. They are founded on the idea that in their formation private companies exist only for the purpose of dodging taxation. Only a very small number in fact have been formed for that purpose. The real lesson to be learned is this: that it is no use trying to put up elaborate machinery to stop tax evasion, you only injure legitimate enterprises and
catch very few people. The real method of stopping tax evasion is so to graduate your taxes that nobody wishes to evade them.

Sir A. STEEL-MAITLAND: We are now saying Goodbye" to this Clause so far as this Committee is concerned, and the Government no doubt will realise that the Opposition have foregone discussion on many points of importance, some of which may come up on Report stage. We have compressed the discussion within very narrow limits indeed. We cannot say "Goodbye" to this Clause without realising that it is an epitome of our discussions on the rest of the Bill. The same good sense should have been applied to Clauses 29 to 33 as was applied in the case of the original Clause 12, which was withdrawn. We shall consider the new Clause 12 in a few moments; it is entirely different from the Clause which was postponed. The same procedure should have been adopted in regard to Clauses 29 and 30, certainly in regard to Clause 33. We have attempted to co-operate with the Government in trying to see that those companies which are trying to evade taxation are caught, but we must realise that we have a great deal more than that to achieve. The Attorney - General throughout our discussions has spoken of that company in which the person who wishes to evade taxation is parting with his property but reserves benefit for himself. It is quite clear now that the companies which will come under the ambit of this Clause is not only that company, but a vast number of other companies which no one ever contemplated should be brought under provisions of an Act of Parliament framed to deal with tax evasion. When it comes to the means taken to deal with those who try to frustrate their obligations to pay taxes, which other taxpayers pay, the moment you try to measure the real benefit, which is the way by which you frustrate the tax-dodger, the definition of benefit breaks in two in your hands. From that point of view we are bound to vote against this Clause and express our opinion that it is as badly conceived as any legislation that has ever been brought before the House of Commons.

Mr. J. JONES: We have often heard hon. Members opposite protesting against taxation in various forms.
We are trying by this Finance Bill to make those pay who can afford to pay. The right hon. Member for Tamworth (Sir A. Steel-Maitland) tells us that he is up against the tax-dodger just as much as the Government are. Why did he not use his influence with the last Government to deal With the tax-dodger during the years they were in power? Companies have been formed for the purpose of evading taxation——

Sir A. STEEL-MAITLAND: If the hon. Member will exercise his Memory he will find that in the Budgets of previous years we made special provisions for the prevention of tax evasion which were better framed to achieve that object than this Clause.

Mr. JONES: There is the formation of companies by great landlords. That was not dealt with by the last Government. We have people who turn their private estates into public companies; and thereby evade taxation. The last Government were after the poor men all the time. Now we are after them all, whether they are big or little; if they try to evade taxation, they will have to go through the mill. The right hon. Member and his friends are always talking about the big man and forget the little man. In the West End of London we have had Members of this House and

of the other House forming their estates into private companies in order to escape certain taxes placed Upon them by the Budget of the year. They have sold out and got a good price, and only pay ordinary Income Tax. My property will be sold when I am dead for about £10. I shall not be there to see that the price is paid over. I want to remind hon. Members opposite, when they talk about the burdens of taxation, that it is the working classes who still pay the highest amount in taxation, and they have to work for what they get.

Lieut. - Colonel Sir FREDERICK HALL: I must protest against the speeches continually made by the hon. Member for Silvertown (Mr. J. Jones) with regard to those who, perhaps, have had sufficient brains to enable them to snake a certain amount of money which is used for the benefit of the working classes of this country. The hon. Member has never anything to say with regard to those who have endeavoured to make and look after the places of many of the working classes, and I protest against the continual cant and hypocrisy of the hon. Member.

Question put, "That the Clause, as amended, stand part of the Bill."

The Committee divided: Ayes, 261; Noes; 126.

Division No. 410.]
AYES.
[7.41 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Cameron, A. G.
Graham, Rt. Hon. Wm. (Edin., Cent.)


Adamson, W. M. (Staff., Cannock)
Cape, Thomas
Granville, E.


Aitchison, Rt. Hon. Craigie M.
Charleton, H. C.
Gray, Milner


Alpass, J. H.
Chater, Daniel
Grenfell, D. R. (Glamorgan)


Ammon, Charles George
Church, Major A. G.
Griffith, F. Kingsley (Middlesbro' W.)


Arnott, John
Clarke, J. S.
Groves, Thomas E.


Aske, Sir Robert
Cluse, W. S.
Grundy, Thomas W.


Attlee, Clement Richard
Clynes, Rt. Hon. John R.
Hall, F. (York, W. R., Normanton)


Ayles, Walter
Cocks, Frederick Seymour
Hall, G. H. (Merthyr Tydvil)


Baker, John (Wolverhampton, Bilston)
Compton, Joseph
Hall, Capt. W. P. (Portsmouth, C.)


Baldwin, Oliver (Dudley)
Cove, William G.
Hardie, George D.


Barnes, Alfred John
Daggar, George
Harris, Percy A.


Barr, James
Dallas, George
Hartshorn, Rt. Hon. Vernon


Batey, Joseph
Day, Harry
Hastings, Dr. Somerville


Bellamy, Albert
Dudgeon, Major C. R.
Haycock, A. W.


Bennett, Capt. Sir E. N. (Cardiff C.)
Duncan, Charles
Hayes, John Harvey


Bennett, William (Battersea, South)
Ede, James Chuter
Henderson, Arthur, Junr. (Cardiff, S.)


Benson, G.
Edmunds, J. E.
Henderson, Thomas (Glasgow)


Bentham, Dr. Ethel
Edwards, E. (Morpeth)
Henderson, W. W. (Middx., Enfield)


Bevan, Aneurin (Ebbw Vale)
Egan, W. H.
Herriotts, J.


Birkett, W. Norman
Elmley, Viscount
Hirst, G. H. (York W. R. Wentworth)


Bowen, J. W.
Foot, Isaac
Hirst, W. (Bradford, South)


Bowerman, Rt. Hon. Charles W.
Forgan, Dr. Robert
Hoffman, P. C.


Brockway, A. Fenner
Freeman, Peter
Hore-Belisha, Leslie


Brooke, W.
Gardner, B. W. (West Ham, Upton)
Horrabin, J. F.


Brothers, M.
Gardner, J. P. (Hammersmith, N.)
Hudson, James H. (Huddersfield)


Brown, C. W. E. (Notts, Mansfield)
George, Megan Lloyd (Anglesea)
Hunter, Dr. Joseph


Brown, Ernest (Leith)
Gibbins, Joseph
Hutchison, Maj.-Gen. Sir R.


Buchanan, G.
Gibson, H. M. (Lancs, Mossley)
Isaacs, George


Burgess, F. G.
Gill, T. H.
Jenkins, W. (Glamorgan, Neath)


Burgin, Dr. E. L.
Glassey, A. E.
John, William (Rhondda, West)


Buxton, C. R. (Yorks, W. R. Elland)
Gossling, A. G.
Johnston, Thomas


Caine, Derwent Hall-
Graham, D. M. (Lanark, Hamilton)
Jones, F. Llewellyn- (Flint)


Jones, J. J. (West Ham, Silvertown)
Morgan, Dr. H. B.
Shinwell, E.


Jones, Rt. Hon. Leif (Camborne)
Morley, Ralph
Short, Alfred (Wednesbury)


Jones, Morgan (Caerphilly)
Morris, Rhys Hopkins
Simmons, C. J.


Jones, T. I. Mardy (Pontypridd)
Morrison, Herbert (Hackney, South)
Simon, E. D. (Manch'ter, Withington)


Jowett, Rt. Hon. F. W.
Morrison, Robert C. (Tottenham, N.)
Sinclair, Sir A. (Caithness)


Jowitt, Rt. Hon. Sir W. A.
Mort, D. L.
Sinkinson, George


Kelly, W. T.
Moses, J. J. H.
Sitch, Charles H.


Kennedy, Thomas
Mosley, Lady C. (Stoke-on-Trent)
Smith, Ben (Bermondsey, Rotherhithe)


Kenworthy, Lt.-Com. Hon. Joseph M.
Mosley, Sir Oswald (Smethwick)
Smith, Frank (Nuneaton)


Kinley, J.
Muff, G.
Smith, H. B. Lees- (Keighley)


Knight, Holford
Muggeridge, H. T.
Smith, Rennie (Penistone)


Lang, Gordon
Murnin, Hugh
Smith, Tom (Pontefract)


Lansbury, Rt. Hon. George
Nathan, Major H. L.
Smith, W. R. (Norwich)


Lathan, G.
Naylor, T. E.
Snell, Harry


Law, Albert (Bolton)
Newman, Sir R. H. S. D. L. (Exeter)
Snowden, Rt. Hon. Philip


Law, A. (Rosendale)
Noel Baker, P. J.
Snowden, Thomas (Accrington)


Lawrence, Susan
Oldfield, J. R.
Sorensen, R.


Lawrie, Hugh Hartley (Stalybridge)
Oliver, P. M. (Man., Blackley)
Stamford, Thomas W.


Lawson, John James
Palin, John Henry
Stephen, Campbell


Lawther, W. (Barnard Castle)
Paling, Wilfrid
Strauss, G. R.


Leach, W.
Palmer, E. T.
Sullivan, J.


Lee, Frank (Derby, N. E.)
Parkinson, John Allen (Wigan)
Sutton, J. E.


Lee, Jennie (Lanark, Northern)
Perry, S. F.
Taylor, R. A. (Lincoln)


Lees, J.
Pethick-Lawrence, F. W.
Thurtle, Ernest


Lewis, T. (Southampton)
Phillips, Dr. Marion
Tinker, John Joseph


Lindley, Fred W.
Pole, Major D. G.
Tout, W. J.


Lloyd, C. Ellis
Potts, John S.
Townend, A. E.


Logan, David Gilbert
Price, M. P.
Turner, B.


Longbottom, A. W.
Pybus, Percy John
Vaughan, D. J.


Longden, F.
Quibell, D. J. K.
Viant, S. P.


Lowth, Thomas
Ramsay, T. B. Wilson
Walkden, A. G.


Lunn, William
Raynes, W. R.
Walker, J.


Macdonald, Gordon (Ince)
Richards, R.
Wallace, H. W.


McElwee, A.
Richardson, R. (Houghton-le-Spring)
Watkins, F. C.


McEntee, V. L.
Riley, Ben (Dewsbury)
Watson, W. M. (Dunfermline)


McGovern, J. (Glasgow, Shettleston)
Riley, F. F. (Stockton-on-Tees)
Wellock, Wilfred


McKinlay, A.
Ritson, J.
Welsh, James (Paisley)


Maclean, Sir Donald (Cornwall, N.)
Romeril, H. G.
Welsh, James C. (Coatbridge)


Maclean, Neil (Glasgow, Govan)
Rosbotham, D. S. T.
West, F. R.


MacNeill-Weir, L.
Rowson, Guy
Westwood, Joseph


Mander, Geoffrey le M.
Russell, Richard John (Eddisbury)
White, H. G.


Mansfield, W.
Salter, Dr. Alfred
Whiteley, Wilfrid (Birm., Ladywood)


March, S.
Samuel, Rt. Hon. Sir H. (Darwen)
Wilkinson, Ellen C.


Marcus, M.
Samuel, H. Walter (Swansea, West)
Williams, David (Swansea, East)


Markham, S. F.
Sanders, W. S.
Williams, Dr. J. H. (Llanelly)


Marley, J.
Sandham, E.
Wilson, C. H. (Sheffield, Attercliffe)


Marshall, Fred
Sawyer, G. F.
Wilson, J. (Oldham)


Mathers, George
Scrymgeour, E.
Wilson, R. J. (Jarrow)


Matters, L. W.
Scurr, John
Winterton, G. E. (Leicester, Loughb'gh)


Maxton, James
Sexton, James
Wood, Major McKenzie (Banff)


Messer, Fred
Shaw, Rt. Hon. Thomas (Preston)
Wright, W. (Rutherglen)


Middleton, G.
Sherwood, G. H.
Young, R. S. (Islington, North)


Millar, J. D.
Shield, George William



Milner, Major J.
Shiels, Dr. Drummond
TELLERS FOR THE AYES.—


Montague, Frederick
Shillaker, J. F.
Mr. Charles Edwards and Mr.




William Whiteley.


NOES.


Acland-Troyte, Lieut.-Colonel
Colman, N. C. D.
Guinness, Rt. Hon. Walter E.


Albery, Irving James
Colville, Major D. J.
Hacking, Rt. Hon. Douglas H.


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Crichton-Stuart, Lord C.
Hall, Lieut.-Col. Sir F. (Dulwich)


Atholl, Duchess of
Cranborne, Viscount
Hartington, Marquess of


Atkinson, C.
Crookshank, Capt. H. C.
Harvey, Major S. E. (Devon, Totnes)


Baillie-Hamilton, Hon. Charles W.
Dalrymple-White, Lt.-Col. Sir Godfrey
Haslam, Henry C.


Baldwin, Rt. Hon. Stanley (Bewdley)
Davidson, Rt. Hon. J. (Hertford)
Henderson, Capt. R. R. (Oxf'd, Henley)


Balfour, George (Hampstead)
Davies, Dr. Vernon
Heneage, Lieut.-Colonel Arthur P.


Bainiel, Lord
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hennessy, Major Sir G. R. J.


Berry, Sir George
Davison, Sir W. H. (Kensington, S.)
Herbert, Sir Dennis (Hertford)


Bevan, S. J. (Holborn)
Dawson, Sir Philip
Hills, Major Rt. Hon. John Waller


Birchall, Major Sir John Dearman
Dixon, Captain Rt. Hon. Herbert
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.


Bird, Ernest Roy
Dugdale, Capt. T. L.
Howard-Bury, Colonel C. K.


Boothby, R. J. G.
Edmondson, Major A. J.
Hudson, Capt. A. U. M. (Hackney, N.)


Bourne, Captain Robert Croft
Erskine, Lord (Somerset, Weston-s.-M.)
Iveagh, Countess of


Bowyer, Captain Sir George E. W.
Everard, W. Lindsay
Kindersley, Major G. M.


Bracken, B.
Falle, Sir Bertram G.
King, Commodore Rt. Hon. Henry D.


Braithwaite, Major A. N.
Fermoy, Lord
Law, Sir Alfred (Derby, High Peak)


Brass, Captain Sir William
Ford, Sir P. J.
Leighton, Major B. E. P.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Forestier-Walker, Sir L.
Lewis, Oswald (Colchester)


Bullock, Captain Malcolm
Galbraith, J. F. W.
Llewellin, Major J. J.


Cadogan, Major Hon. Edward
Ganzoni, Sir John
Locker-Lampson, Rt. Hon. Godfrey


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Gower, Sir Robert
McConnell, Sir Joseph


Cazalet, Captain Victor A.
Grattan-Doyle, Sir N.
Macquisten, F. A.


Christie, J. A.
Greaves-Lord, Sir Walter
Marjoribanks, E. C.


Churchill, Rt. Hon. Winston Spencer
Gretton, Colonel Rt. Hon. John
Merriman, Sir F. Bovd




Monsell, Eyres, Com. Rt. Hon. Sir B.
Remer, John R.
Steel-Maitland, Rt. Hon. Sir Arthur


Moore, Sir Newton J. (Richmond)
Rentoul, Sir Gervais S.
Thomson, Sir F.


Moore, Lieut.-Colonel T. C. R. (Ayr)
Reynolds, Col. Sir James
Titchfield, Major the Marquess of


Morrison, W. S. (Glos., Cirencester)
Roberts, Sir Samuel (Ecclesall)
Train, J.


Muirhead, A. J.
Rodd, Rt. Hon. Sir James Rennell
Tryon, Rt. Hon. George Clement


Newton, Sir D. G. C. (Cambridge)
Salmon, Major I.
Ward, Lieut.-Col. Sir A. Lambert


Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld)
Samuel, A. M. (Surrey, Farnham)
Warrender, Sir victor


O'Connor, T. J.
Samuel, Samuel (W'dsworth, Putney)
Waterhouse, Captain Charles


O'Neill, Sir R.
Sandeman, Sir N. Stewart
Windsor-Clive, Lieut.-Colonel George


Ormsby-Gore, Rt. Hon. William
Sassoon, Rt. Hon. Sir Philip A. G. D.
Withers, Sir John James


Peake, Capt. Osbert
Skelton, A. N.
Wolmer, Rt. Hon. Viscount


Penny, Sir George
Smith, R. W. (Aberd'n & Kinc'dine, C.)
Womersley, W. J.


Percy, Lord Eustace (Hastings)
Smith-Carington, Neville W.
Worthington-Evans, Rt. Hon. Sir L.


Peto, Sir Basil E. (Devon, Barnstaple)
Somerville, A. A. (Windsor)
Young, Rt. Hon. Sir Hilton


Pownall, Sir Assheton
Southby, Commander A. R. J.



Ramsbotham, H.
Spender-Clay, Colonel H.
TELLERS FOR THE NOES.—


Reid, David D. (County Down)
Stanley, Lord (Fylde)
Captain Margesson and Captain




Wallace.


Question, "That the Clause be read a Second time," put, and agreed to.

Mr. CHURCHILL: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
Following what I may now call the usual practice, I think at this stage in our proceedings I might, for the general convenience of the Committee and to facilitate public business, move this Motion for the purpose of ascertaining from the Chancellor of the Exchequer his views, not only upon the immediate progress of the Bill this evening, but, taking a rather more extensive view, upon its future progress. In fact I might ask him—though I have no knowledge of whether the right hon. Gentleman will be able to make any response or not—what his ideas are as regards the completion of the Committee stage. We are now going to embark on what was originally Clause 12 in its revised form, and if that Clause, on examination, is found to be one which can be disposed of with some rapidity, we might come to the other new Clauses to-day, and then, if we work hard and amicably on Monday, we might dispose of quite a number of new Clauses. One or two of these are important. There is one which we are anxious to discuss, which is not yet on the Paper, but I think that on the lines which I have suggested we might, conceivably, map out our work in a manner which would secure the highest efficiency in debate and the least inroads upon the already heavily strained physical energy of the Members of the Committee.

Mr. P. SNOWDEN: I am afraid I cannot say anything about the programme beyond to-day's proceedings. I expressed the hope last night, and I think I repeated it to-day, that we should be able to make considerable inroads on the new Clauses this evening.
On how far we get to-night, of course, will largely depend what further time may be required for the completion of the Committee stage of the Bill. But I think that the right hon. Gentleman will have to be content at the moment with a repetition of what I have already said, namely, that I hope that this Clause which was originally Clause 12 of the Bill and which in its amended form is not at all controversial, will not occupy much time. The right hon. Gentleman, I think, mentioned two new Clauses to which he appeared to attach great importance. I am always anxious to meet the right hon. Gentleman's convenience and I do not wish to have those Clauses debated in the small hours of the morning when, perhaps, only a small number of Members will be able to hear the eloquence of the right hon. Gentleman, and when he would not have that attention which he would certainly receive if he delivered his oration in an earlier part of our proceedings. But at the moment I cannot say more than this—that we must get on with the first new Clause which is the revised form of the original Clause 12, and then see what progress we can make with the other new Clauses. I may, perhaps, add that I do not think it will be necessary that the Committee should sit to-night later than 12 o'clock.

Mr. CHURCHILL: Perhaps at about 10 o'clock I may put another question to the right hon. Gentleman with a view to accelerating business as much as possible. I am not complaining of what he has said, but he must know that if these matters are kept in suspense for a long time, hon. Members become exceedingly anxious and disturbed as to the future progress of the Bill, and tend to dwell with more insistency and thoroughness on some of its aspects than perhaps they
would if they understood that the happy relationships established during the conduct of this very controversial Measure were going to continue. Therefore, I hope that if, say at 10 o'clock, the right hon. Gentleman should feel that the light is shining a little more clearly on his path and that he can discern more accurately the general scope of the further stages which we have to take, he will not hesitate to tell us, for his own sake no less than for ours. I beg to ask leave to withdraw my Motion.

Motion, by leave, withdrawn.

NEW CLAUSE.—(Provisions as to interest on loans used for payment of premiums, etc.)

(1) Subject to the provisions of this section, in computing for the purposes of surtax the total income for any year of an individual who has entered into a contract of assurance no deduction shall be allowed in respect of any interest on any borrowed money which has been applied directly or indirectly to or towards the payment of any premium under that contract, or of any sum paid in lieu of any such premium.

(2) Where the benefit of a contract of assurance entered into by any person has become vested in another person, being an individual, sub-section (1) of this section shall apply in relation to that individual—

(a) as if the contract had been a contract entered into by him; and
(b) in a case where the benefit of the contract became vested in him by virtue of an assignment and any payment was made by him in consideration of the assignment, as if that payment were the payment of a premium under the contract; and
(c) in a case where, either as being the person in whom the said benefit is vested, or by reason of any agreement under or in pursuance of which the said benefit became vested in him, he pays any interest on any borrowed money, as if that money had been applied to the payment of a premium under the contract.

(3) This section shall not, where the interest is payable at a rate not exceeding ten per cent. per annum, apply to—

(a) interest on borrowed money applied to or towards the payment of any premium under a contract of assurance entered into before the fifteenth day of April, nineteen hundred and thirty, which assures a fixed capital sum payable either—

(i) on death only; or
(ii) on the expiration of a period of not less than ten years from the date of the commencement of the contract or on earlier death;

2240
(b) interest on Money borrowed before the sixth day of April, nineteen hundred and twenty-nine, unless—

(i) the money was borrowed from an assurance company; and
(ii) the repayment thereof was secured on a contract of assurance; and
(iii) the premium in question was a premium under that contract;

(c) interest on money borrowed mainly on the security of property other than a contract of assurance, if the premium in question either—

(i) is payable under a contract of assurance entered into in order to provide against the failure of a contingent interest in any property, and to serve as additional security for the loan and for no other purpose; or
(ii) is the first of a series of premiums payable under a contract of assurance entered into solely in order to provide for the repayment of the money borrowed and does not exceed ten per cent. of the sum assured under that contract;

(d) interest on borrowed money applied to or towards the payment of premiums under a contract of assurance, which assures throughout the term of the contract, a capital sum payable on death, if neither the amount of the first premium under the contract nor the amount subsequently payable by way of premiums thereunder in respect of any period of twelve months exceeds one-eighth of the capital sum payable on death;
(e) interest on borrowed money applied to or towards the payment of premiums (not being premiums such as those specified in the preceding paragraphs of this subsection) each of which is one of a series of equal premiums payable at equal intervals of not more than one year, except so far as such interest exceeds in the year of assessment on hundred pounds inall.

(4) The provisions of section twenty-two of the Finance Act, 1922, with regard to the delivery of particulars as to deductions claimed to be allowed, shall be extended so as to enable the special commissioners to require such particulars with respect to deductions and otherwise as they may consider necessary for the purpose of carrying this section into effect.

(5) In this section—

(a) the expression "contract of assurance" means a contract of assurance or a contract similar in character to a contract of assurance, being in either case a contract under which a capital sum is expressed to be payable in the future in return for one or more antecedent payments, and the expression "premium" means any such antecedent payment;
(b) the expression "interest" includes any sum payable in respect of any borrowed money;
2241
(c) any reference to borrowed money applied to or towards any payment shall be deemed to include a reference to borrowed money applied directly or indirectly to or towards the replacement of any money so applied;
(d) any reference to a capital sum payable on death under a contract of assurance shall be construed as a reference to the actual capital sum assured on death, exclusive of any addition which has arisen or may arise from any bonus, share of profits, return of premiums or otherwise, and in the case of a contract under which different capital sums are payable on death in different events, as a reference to the least of those sums.—[Mr. P. Snowden.]

Brought up, and read the First time.

Mr. P. SNOWDEN: I beg to move, "That the Clause be read a Second time."
This Clause is in substitution for the Clause 12 which originally appeared in the Bill. When that Clause came before the Committee I agreed to a postponement of its consideration in order that negotiations might be continued with certain interested parties, particularly the representatives of the life assurance companies, to see whether objections which had been raised and criticisms which had been levelled against it might be met. I am glad to say that the negotiations which have since taken place between the Board of Inland Revenue and the Association of Life Offices have reached a very successful conclusion, and the Clause which I now submit to the Committee represents the agreement which has been reached. It will be remembered that a White Paper was circulated some time ago explaining Clause 12, and that relieves me from the necessity of doing more on this occasion than explaining the changes which have been made as between the old Clause and the new Clause. There are a few minor alterations, mainly of a verbal character, to which I would first draw attention. The word "premiums" has been substituted for "antecedent payments," and I think the Committee will agree that the new word, at any rate, is one that will be more popularly understood. Similarly, the definition of "contract of assurance" which appeared in the old Clause has been removed from Subsection (1) to the end of the Clause. These are not alterations of substance.
8.0 p.m.
There is one other alteration which is I think of some considerable importance. It is now made quite clear that any profits which may be included in the policy of insurance, where a policy secures a definite capital sum, or rather where there are profits secured by the policy, will not be taken into consideration. Secondly, the Committee will find added at the beginning of Sub-section (3) of the Clause words which serve to confine the exemptions enumerated in the Sub-section to cases where the rate of interest does not exceed 10 per cent.

Mr. A. M. SAMUEL: Why 10 per cent.?

Mr. SNOWDEN: It is a purely protective figure, and the sole object of the words is to prevent evasion of the Clause by means of loans at rates of interest which are artificial. Thirdly, there is a fresh exemption inserted in paragraph (a) of Sub-section (3), and this is perhaps the most important which has been made and one which was perhaps one of the principal matters of discussion which the Inland Revenue have had with the representatives of the life assurance companies. It is this: Under this exemption, all the life insurance policies, including single premium policies, entered into before the date of the Budget will be exempted from the operation of the Clause, provided they have a term of life of not less than 10 years. This is the most important alteration that has been made in the Clause. Policies of this character, unlike the policies of the sinking fund or pure endowment type, the abuse of which has led up to the necessity for this Clause, do contain a real measure of genuine life insurance, even although they undoubtedly also carry with them a certain advantage in the way of relief—I will not say avoidance—of Surtax. As avoidance in this way is being made impossible in the future, it is not unreasonable to give this restricted measure of protection to contracts already entered into in good faith between the taxpayer and the assurance company.
There is another Amendment of some importance, and it is in Sub-section (3, b) of the old Clause, which now becomes Sub-section (3, c). This Sub-section governs the case where a taxpayer borrows money from an insurance company on security other than a policy, taking out at the same time a policy to
secure repayment of the loan, and the first premium under that policy, as a matter of course, is deducted from the borrowed money. This, I think the Committee will agree, is a genuine business transaction with no element of tax avoidance in it.
Lastly, Sub-section (3, d), formerly Sub-section (3, c), has been substantially altered with the object of defining the ordinary run of annual premium life insurance so as to put it right outside the Clause. We have no desire to do—and indeed it has been our wish all through the consideration of this matter to avoid doing—anything which would be injurious to genuine life insurance, and I think we have, in the revised Clause, succeeded in protecting genuine life policies. In its original form the conditions laid down in the definition were rather complicated, but as the result of further negotiations between the Board of Inland Revenue and the life assurance companies, a simpler formula has been devised, and I may say that under this all life insurance policies will be regarded as hearing the hall-mark of genuineness if none of the annual premiums exceeds one-eighth of the nominal capital sum payable at death. In cases where different sums are secured at different times, the smallest sum will be taken for the purpose of ascertaining whether or not this condition has been fulfilled.
I think I have explained the changes which have been made as between the old Clause 12 and the Clause which I am now moving. I have said more than once that this new Clause represents an agreement between the Inland Revenue and the life insurance companies, and I am satisfied that, as it now appears, it will succeed in stopping what has hitherto been the legal avoidance of Super-tax payments, while it will not in any way prejudice genuine life insurance; and I want to acknowledge the help that the life insurance offices have given to us in this matter. They have been of very great assistance to us, not only in re-modelling the old Clause 12, but in pointing out to us methods of evasion and in helping us to fill up those gaps. This, as I say, is agreed between us, and I am afraid, therefore, that I shall not be able to accept any Amendment which may be
moved which will materially alter the Clause as it now stands.
I do not know if it is necessary to explain, just in a word, the necessity for a Clause of this character. Probably every Member of the Committee is familiar with the practice, which has been growing up in recent years, of taking out what are called single premium policies for the purpose of avoiding or evading the payment of Supertax. A policy is taken out under which a large single premium is payable, and the money or as much as 97 per cent. of it, is borrowed from the life insurance company. Then the person taking out the policy is able to deduct the interest that he has to pay from the amount of his income for Surtax, and he, has been able to deduct it from the top slice of his Super-tax income. In the case of a policy of a very large amount, that might amount to a reduction in Supertax payment of some thousands of pounds a year. This practice has been growing rather extensively in recent years, and such policies now in operation amount, I understand, to a good many millions of pounds. I should like to add that many of the leading insurance companies have discouraged this practice, but as long as some companies did it, competition was so keen that some companies that were unwilling to do it have been driven to it, and they are welcoming the step that we are taking, because it will, we hope, put an end to a practice which has brought genuine life insurance into discredit, and at the same time maintain unimpaired all the advantages and benefits of genuine life insurance.

Sir A. STEEL-MAITLAND: The Chancellor of the Exchequer, in moving this Clause, has alluded to the action of the life insurance companies. I should be glad also, so far as any of us who have taken an interest in this Clause have had the benefit of the advice of those who have the skilled knowledge which some of the insurance companies possess, to pay my tribute to them, because in all the advice they have given to any of us, there has never at any moment been the least wish to defeat the object which the Chancellor has in mind. Their wish throughout, so far as I have had any knowledge of them, has been to discourage advantage being taken of methods of insurance in
order to defeat the true purpose of the Revenue.
The Chancellor of the Exchequer has also said that he and the insurance companies have discussed the subject-matter of this Clause since it was last brought before this Committee, and have come to an agreement, and I should like to assure him that, so far as that agreement is concerned, though perhaps he is already aware of the fact, those of us who have taken an interest in this Clause have ourselves been informed by the insurance companies of the fact that they have reached an agreement and that they desire, so far as they are concerned, that the principles to which they have given approval should be embodied in legislation. Therefore, I trust that the Chancellor of the Exchequer will agree that in any criticisms which we may adduce upon this Clause, so far as the insurance companies are concerned, they have neither suggested, initiated, nor desired anything of the kind, and that we are doing it entirely on our own initiative. I say this deliberately, because there was a suspicion in the words which the Chancellor used either yesterday or the day before and, though to a slighter extent, to-night, that just because he had agreed upon this Clause with the insurance companies, it was to be passed in its entirety here.
I am sure that I have only to mention it for the right hon. Gentleman to concur, that, of course, no agreement which he reaches with any body of people whatever outside will bind this Committee in its deliberations one way or the other. Therefore, when he asks us almost in advance to accept this Clause because he has agreed as to its terms with the insurance companies, and to regard it as having literal inspiration so that no word can be altered, that is a position which we cannot accept for a moment. On the other hand, of course, as sensible people we realise the spirit in which insurance companies have dealt with this matter, and we do not want to throw the whole thing into the melting pot again. I want to say one or two general words about the Clause. We all realise that from the drafting point of view, and in putting a proper definition Sub-section at the end, it shows an immense improvement in form and in substance.
The point to which I want to allude is Sub-section (3, b). Otherwise, the
general order of the Clause seems quite clear. At the beginning we have the same sort of introduction of the subject as was provided in the original Clause. In Sub-section (2), we have practically the same prevention of evasion by providing that a man cannot do indirectly what he ought not to do directly Sub-section (3) is really the operative Sub-section. I understand that there is a concession under paragraph (a). What I am not quite so clear about, and it is capable of easy explanation, is this: Under paragraph (a) it is clear that single premium policies taken out with borrowed money before 15th April this year—the Budget date—will be still liable. At any rate, this Sub-section will not apply to them if the money it not borrowed so long as they are whole life policies or so long as they are policies which have a currency of not less than 10 years. What I am not quite certain about is with regard to paragraph (b) of Subsection (3). I am not certain whether that deals with the same policies or with a portion of the same policies of the class dealt with under paragraph (a).
Suppose that this Clause is passed as it stands, single premium policies for the future will be possible, and will not come under this Clause, if they are made with the policy holder's own money and without borrowing. As to existing single premium life policies and policies of a currency of not less than 10 years, those that have been taken out before the Budget day will not be affected by the Clause, even though they have been taken out on money borrowed from an insurance company, and although the payment of it was secured on a contract of insurance. When the proper time comes, perhaps we can have some explanation of the precise object of Sub-section (3, b). Further than that, I do not wish to pursue the subject at the moment, except to say by way of anticipation that probably there is raised a question of retro-active legislation, about which we may have some words to say without it affecting the structure or the essential nature of the Clause.
Nothing has been said with regard to Sub-section (4) The provisions of that Sub-section are extraordinarily wide. If anyone reads Section 22 of the Finance Act of 1922, they will see that very considerable powers are given, and just how
much this vaguely expressed intention is intended to cover is a matter about which we shall probably have to ask subsequently. Otherwise, subject to some criticism and to some of the Amendments of which notice has been given, we can say that this, Clause is a great improvement on the Clause that was previously introduced. We think the Chancellor was well advised to accept the suggestion of my hon. Friend the Member for Watford (Sir D. Herbert) to bring it in again and we only regret that he did not take the same step with regard to the Clauses which we have just passed.

Mr. A. M. SAMUEL: I want to put some questions so that we may know where we are. Is the Budget date the starting point for the operation of this Clause; how far is the Clause retroactive, and when does it begin to apply to existing contracts? That is all I want to know, because when we get these points cleared up, we shall know how the proposed law operates.

Mr. PALMER: I cannot allow this opportunity to pass without saying, as one who knows something about insurance and the practical application of these things, that this is a Clause which meets the industry in an admirable and generous manner. At the same time, I agree with the right hon. Member for Tamworth (Sir A. Steel-Maitland) that even agreements between the Chancellor of the Exchequer and the life assurance offices cannot be subversive of the rights and powers of this Committee. What I see in this proposed new Clause more than anything else is a correct attitude on the part of the Government and the Treasury to give a proper and thorough going business facility for what is, after all, a very extensive business and an important business in the life of this nation. It operates very extensively in all money matters and in all matters of income.
I was not surprised to find the Chancellor of the Exchequer pointing to the grave abuses as regards tax evasion that were possible under the single premium method, and I say without hesitation, knowing British insurance offices, and knowing the practical men in the field, that this new legislation is a welcome
step. In spite of what may have been said to the contrary about our industry, I do not hesitate to say that it will always come down on the side of the State whenever there is any question of evasion. This Clause will, on the other hand, allow the development of legitimate business, in which we should otherwise have been handicapped, and on behalf of the industry as well as on behalf of the party of which I am a member I congratulate the Chancellor on this new Clause and I hope the Committee will take it from me that it is one which ought to be accepted.

Sir D. HERBERT: When the original Clause 12 was reached in the Committee stage I made some remarks about it which were not at all complimentary to it, and I am glad to be able to say that, in my humble opinion, this new Clause is an immense improvement. It is now a reasonable Clause. While congratulating the Chancellor of the Exchequer I may, perhaps, to some extent, congratulate myself on the suggestions which I made to him, and on having been so persistent. There is one point in regard to which I think he might have done better. My friends and I thought that some of us would be called into consultation as well as the representatives of the Life Offices Association, and had that been done I think it is extremely probable that the right hon. Gentleman would have got his Clause through to-night with even less discussion than now. I was entirely unaware that the Chancellor and his advisers had made any progress with the Life Offices Association until two or three days ago, and I have felt obliged to put down one or two Amendments to raise certain points, though not in any spirit of hostility to the Clause.
There is this justification for considering the Clause very carefully. The Life Offices Association, excellent as their objects in this matter may have been, and good as their work may have been—and all that I acknowledge most candidly—cannot bind any party in this Committee, and they do not even represent all the business interests concerned. I suppose my own profession has as much to do with transactions in policies after they have been effected as any profession, and, as is very well known to members of the lower branch of the legal profession points arise which are not within
the cognisance of the Life Offices Association or life assurance societies generally. Therefore, I think it is unfortunate that the Chancellor did not call others into consultation.
I wish to refer to one or two points which the Chancellor mentioned in explaining the changes which have been made in this Clause. I am glad to notice that the alternative Clause which I put down has been made use of to some extent. It was only a skeleton Clause, but I think it has helped to make this Clause simpler. The most important part of this new Clause, or the portion which is most open to criticism, is Sub-section (3). I have no complaint at all about Sub-sections (1) and (2) but there are one or two points which may arise on Subsection (3) and we must discuss them on certain Amendments, though I may say that one or two are more drafting Amendments than anything else. But I observe that the Government propose now to relieve from the operations of this Clause all single-premium policies which were effected before the recent Budget, subject to the interest net exceeding 10 per cent., and when the policy is one which is payable on death only or payable on the expiration of a period of not less than 10 years. I have an Amendment on that which will allow that important question to be discussed later.
We are all aware of extreme cases in which payment of tax has been avoided by these short-term policies which really have no element of life insurance in them. On the other hand, there are policies which have a big element of life insurance, and I think the Government ought to take care that they do not hit policies where the element of life insurance is by far the biggest thing in the policy, and where the Government are very nearly certain—certain in 99 cases out of 100—to get very heavy death duties when the assured dies. With a view to discussing that question generally I have put down an Amendment. There are still faults in the drafting of this Clause which might have been avoided if others had been called into consultation. I refer particularly to Sub-section (3, c). That provides for the exemption applying to a policy which is taken out to protect a contingent interest or something of that kind. Obviously, one thing is there omitted. A policy taken
out for the protection of a contingent interest is, I take it, in all ways on exactly the same footing as a policy which is taken out to protect a wasting interest, and I hope I am right in assuming that the Government will accept an Amendment to cover policies against a wasting interest.
The case of a policy with a contingent interest is limited in a way which I am inclined to think militates against what ought to be the policy of the Government, and what has been the policy of this country, that is to try and increase the amount of genuine life insurance. That has been qualified here by the necessity for what I call the supporting policy being taken out to serve as an additional security for the loan, and for no other purpose. I hope that that matter will be reconsidered between now and the Report stage. That is a question upon which some of us desire to be satisfied in one way or another. For the moment we certainly are not satisfied, and we hope to get some reasonable consideration for this question when we come to that part of the Clause. I would like to thank the Chancellor of the Exchequer and the Financial Secretary to the Treasury for what they have done in this matter, and to say that, as far as I am concerned, I shall proceed in a spirit of good will towards this Clause, which is mainly directed towards an object with which we all sympathise, and it does not stray very far from what we have been asking for.

Major HILLS: I congratulate the Government upon having produced a Clause which meets many of the objections which we have put forward from these benches. I am glad that they have done so, because I have covered the Order Paper with Amendments with a view to improving the original Clause 12. I confess to the Financial Secretary that I found my task an extremely difficult one, but now we have a very clearly-drawn Clause, and my criticisms will be upon small matters where the intention is not clearly expressed, and where I think the concessions which have been made might have gone a little further. It is always rather ungracious to ask for further concessions, more especially when so many have been granted, but there are
two or three points which I desire to mention.
First of all, I think the Government are very wise in proceeding on the lines of excluding transactions in policies in which there is no life element. Nearly all those so-called tax evasion transactions are carried out on policies of very short currency up to six or seven years. They have no life element at all about them, and the money is only paid at the expiration of the term of the policy. If the insured should die during the currency of the policy no payment is made to the executors, and it is more in the nature of a gambling transaction. My second point is that actually, in hard cash, more money is paid to the insurance company than comes back to the insured, provided that the insured person lives for five or seven years. The advantage he gets is at the expense of the Treasury to such an extent that he can afford to pay co the insurance company for a so-called policy of insurance substantially a larger sum than he gets. All those transactions are now excluded, and they are wisely excluded.

Mr. PALMER: I would like the right hon. and gallant Member for Ripon (Major Hills) to be more specific about the cases where insurance can be overpaid in the manner which he has described.

Major HILLS: It is overpaid in this way: A single premium policy is taken out for a large sum, and 97½ per cent. of that premium is borrowed at interest. If you reckon up the interest it will be found that a good deal more is paid to the company than comes back to the insured if the man lives to the end of the time, and should he die during the currency of the policy all that interest is lost.

Mr. PALMER: I agree that, plus the interest, you may arrive at that conclusion.

Major HILLS: Practically the whole of the single premium is borrowed, and that premium, for a short currency policy, is bound to be a very large fraction of the value of the policy. Under Sub-section (3) the Government have made it a necessity that the policy should possess a life element, and should not be merely a
gambling transaction. Secondly, I see that the term of 10 years has been fixed element, and should not be merely a policy to which this concession is granted, and I think that that is quite sound, too, if I may say so. Nobody takes out an endowment policy for less than 10 years for pure insurance purposes, or, at any rate, such policies are so rare that they need not be counted. Therefore, I think that the Clause is very well constructed. It meets the evil that the Government have to meet, and I think that in the main it does not damage insurance.
The important part of the Clause is Sub-section (3), which contains the exceptions, and I desire to make a few remarks upon it. The except-ions are limited to cases where interest is payable at a rate not exceeding 10 per cent. per annum, and I think that that also is quite a sound limit. Nobody would pay more than 10 per cent. in a reasonable business transaction, and I think that the Government have come to a wise decision here. Coming to paragraph (b):
interest on money borrowed before the sixth day of April, 1929,
I do not at present quite see what this does. The exception is given in regard to policies that were taken out before the 15th April of this year, and I do not see that the matter is carried very much further by paragraph (b).
A further objection, and a more important one, that I feel is in regard to paragraph (c) of Sub-section (3), which enables a man to borrow the premiums on a policy which he has assigned as security for a loan to cover the failure of a contingent interest in any property. A man may be entitled to come into money under a will, but he may lose that money if somebody living marries and has a child; and so, if he wants to borrow on that contingent interest, he must insure against the possibility of that child being born. There is another class of loan that I think ought to be included here. It is where a man borrows on a wasting security. Suppose that a man has a leasehold of a short term, say of 10, 12, or 15 years. If he wishes to raise money upon it, he must include a policy of leasehold redemption which runs out at the same time as the lease, and I do not think that under either sub-paragraph (i) or sub-paragraph (ii) of paragraph (c)
he can do that. He can provide against the failure of a contingent interest, but I cannot see that he can borrow the premiums that fall due on a leasehold redemption policy, and I think it was the intention of the Government that he should be able to do so. I think that my hon. Friend the Member for Watford (Sir D. Herbert) raised this point during the first discussion of this matter, and I understood that the Chancellor of the Exchequer accepted his suggestion. Certainly, it is quite a fair suggestion; there is no sort of tax-dodging about a transaction of that kind. A man may be compelled, in these days, to raise money, and, if his only possession is the lease of a house, he must take out an endowment policy to complete the security. There is no tax-dodging about that at all; it is simply a facility which we may all be driven to use.
Then, at the beginning of paragraph (c), we find the word "mainly"—
interest on money borrowed mainly on the security of property other than a contract of assurance.
Therefore, the benefit of this Clause would not be given unless the money were borrowed mainly on property which was not the policy. May I put to the Financial Secretary a case which I think ought to be covered? Take the case of a man who holds a policy on his life. Assume that that policy was taken out many years ago, and that it runs at a premium of £100 a year. He may want to raise money on that policy. He goes to an insurance office, and says, "I will give you security for the premium on this policy. I have property or investments which I will pledge to you to meet the contingency of my failing to pay my premium, in order to complete the security for the loan on the policy." In that case the loan would not be secured mainly on the property, but would be mainly secured on the policy of insurance. That, again, is a perfectly reasonable and proper transaction. He may have a very valuable policy, which has run for many years at a low premium compared with the sum assured, and perhaps that is by far the cheapest way that he has of raising money; but, of course, the insurance office will say, "We have no security that you will pay these premiums. Charge your investments with these premiums, and then we will lend you the
money." I cannot see any danger in leaving out the word "mainly," and I see that my hon. Friend the Member for Watford has an Amendment down to that effect.
Then, as I understand it, paragraph (d) of Sub-section (3) contains the main exception. It grants the benefit: of the exception to interest on borrowed money applied towards the payment of premiums under a contract of assurance which assures, throughout the term of the contract, a capital sum payable on death under certain conditions; and so a man may go to his bank and borrow the premium on his policy, and may deduct the interest on that borrowed money from his Super-tax return. I think that that is a perfectly proper exception to make, but may I ask the Financial Secretary to consider one thing? As I read paragraph (d), it applies only to whole-life policies; it applies to a contract of assurance for a capital sum payable on death. Could not that be extended to an endowment policy for 10 years or longer? Such a policy is a perfectly fair business insurance proposition. When you get a term of 10 years, and still more of 15 or 20 years, you reach a class of insurance that is more and more used. A man rather likes to think that he is not only paying for his successors, and he is not always satisfied with insuring a sum that somebody else can spend. Therefore, he assures a sum that will be paid on his death, but in any event will be paid at the end of, say, 20 years if he lives so long. That is what is called an endowment policy. It is extremely popular; it is perfectly proper; and I do not see why it should not be included under paragraph (d) by some such words as:
a capital sum payable on the expiration of not less than 10 years from the date of the commencement of the contract, or on death.
I venture to think that this point has been omitted accidentally. I do not think that paragraph (d), as drawn, would cover an endowment policy, and I do think that it is a very valuable thing. I think the Financial Secretary will find that, if two conditions are attached to such policies—firstly, that they shall run for 10 years at least, and, secondly, that they shall be payable on earlier death as well as at the expiration of that number of years—or, in other words, if all those transactions are excluded where
there is no life element at all, I think it would be safe. I do not think it matters whether a single premium is paid or whether yearly premiums are paid. A man may want to insure his life for the benefit of his wife, and he may say, "I have got the money now for a single premium; I may not have the money to pay every year. I am rather an extravagant man, and would not trust myself to go on keeping up these premiums." There is no reason why that man should not pay a single premium, borrowing it from his bank, and making the policy quite sure for all time.
I am very glad all those transactions are included in the exceptions and, if the Financial Secretary sticks close to those two points, I think he could meet us on the other points we have raised. I do not want to help those who are escaping taxes. It has gone on to a very great extent. It was disliked intensely by all except a very small fraction of the life offices, but it was almost impossible, when one started, for the rest not to follow. The offices were all engaged in taking business, their agents were making money and things looked profitable for them. Still I know, as a matter of fact, they have warned the Treasury before now of the dangers ahead, and the Association of Life Offices have set their face against it always. So I do not suggest any of these Amendments with any idea of helping the man who wants to escape paying taxes. I think we have a good Clause and, with some of the Amendments of my hon. Friend the Member for Watford, it can be made into a very good Clause.

Sir HUGH O'NEILL: The growth of these single premium tax-evading policies has been very rapid and marked in the last few years, but we cannot avoid remembering that the reason that has given rise to this increasing practice is the very heavy rate of direct taxation from which we are suffering. There are a great many offices which have not gone in for this type of policy. I think my right hon. Friend was not strictly correct in saying practically all the companies had to follow the lead of those who are particularly connected with it, because I know of some which up to to-day have maintained the position that they do not
care for this type of policy. Some of the very large new business figures which have been published by certain offices in recent years have been largely due to the great amount of single premium policies which they have been carrying through.
One of the most important alterations that has been made is that contained in Sub-section (3, a). It amounts to a very-material and considerable concession. It is all to the good as far as it goes, but the Government might have gone further. I do not quite see why these endowment and whole life policies should be limited to those entered into before 15th April of this year, and I think the point my right hon. Friend made was really the same point that I am suggesting, that the time limit of these endowment policies up to the day before the Budget could very properly, and I should have thought very reasonably, be removed. Endowment assurance is a very important, highly popular and greatly increasing form of life insurance, and anything that penalises it, as this Clause may do, is acting contrary to the advancement of life insurance. People like to think, if they are paying annual premiums, that they are going to get some advantage out of it before they die, and that is why the endowment insurance is so popular.
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We in this country are, I believe, very much under-insured as compared with many other countries, and it is very important for all Governments—I believe this Government recognise it as much as those which have preceded it—to encourage to the utmost of its power this very great institution of life insurance. I think no man who is dependent upon any form of salary or annual payment for his living should ever run the risk of death without being covered to some extent by life insurance, and it is a very natural and proper thing for every prudent and sensible man to do. Although we all admit that the Government is right in trying to put a stop to undesirable evasion of Super-tax payment by means of single premium policies, nevertheless they are running some risk in doing anything that is in any way going to affect life insurance or cause any loss of public confidence in it, and I hope very much that this new
Clause, improved as it undoubtedly is, will go no further than to stop these undesirable policies and, if that is so, perhaps not so much damage to the great business of life insurance will be done as many of us had thought might be the result of this Clause.

Sir B. PETO: This Clause is fairly plain. There is only one part to which I want to address myself. It is in Subsection (3), where it appears to be made plain that the Clause as a whole is not to apply to interest on money borrowed before the 15th day of April, 1930, a date which is obviously selected because that was when the mind of the Government was first made public. It is not to apply to money borrowed before that date on a policy which assures a fixed capital sum payable on death only. I am dealing with this question on principle, Probably the minds of the Government are made up as far as this year is concerned, but I want to ask the Financial Secretary to the Treasury whether it is wise to do anything to prevent the Super-tax payer providing money, payable on death only, to be devoted to the payment of Estate Duty. The more we increase Surtax and the more we increase the share of the capital sum to be handed over at death, the more desirable it is, in the interests of the Treasury, to encourage the provision of a sum by insurance which can be handed over in settlement of Death Duties.
It will become more and more difficult to meet the Estate Duty according to how the policy of successive Governments is directed towards raising a larger share of the annual revenue from that source. Therefore, it is necessary to consider the principle whether it would not be wise in the interests of the Government to eliminate the date altogether and to say that they are quite prepared, as a matter of policy, where sums are payable at death only and are to be allocated to the payment of Estate Duties and consequently handed over to the Treasury, to make this act of remission to the Surtax payers during life. This is a policy which is well worth considering. With regard to the date being fixed as the 15th day of April, 1930, I think that it is a very proper thing that contracts with insurance companies entered into before the taxpayer had any knowledge of the objection to this form of
insurance should be allowed to stand. But they say for the future that they are going to discourage any attempt to provide Death Duties by giving no remission of Surtax.
What is the proposition from the point of view of the oldish man who has to provide for an increase in the amount of Estate Duty larger than what he had anticipated in the early stages of his life'? He says, "I can afford, perhaps, to squeeze out of my income the premium for another policy of insurance. I have several policies, but the State is now demanding a still larger amount and I want to leave something for my heirs." This is not an unmeritorious sentiment on the part of anybody, whether old or young. And he says, "If only I had not to pay Surtax on the whole of my income and find this huge additional premium which is now demanded on a life policy because of my age, I might just be able to manage, and I should be providing a sum of ready cash which would prevent the dislocation of my estate, whatever it may be, on my death, and provide something, which could be got straight from the insurance company by my executors and so prevent a great deal of the hardship and dislocation which extend a very long way on the death of a rich man under the present circumstances."
I think that that is a thing which the Treasury ought to discuss. It really savours of the nature of double taxation. I think that it is not unreasonable if any Surtax payer has to make provision for the taking of a large part of his annual income for the settlement of the interest due on the loan raised for a big single premium policy, that the Treasury should say, "Well, that is a thing which on the whole is in the interests of the Treasury in the collection of Estate Duty." I put that point before the hon. Gentleman as another aspect of the question which has not been so thoroughly looked into as the mere question of Super-tax evasion. There are two sides to this question, as there are to most questions, and I have put down a new Clause—it may or may not be called—which bears upon the same question.

The CHAIRMAN: I can hardly allow the hon. Member to discuss his new Clause.

Sir B. PETO: Nothing was further from my mind than to discuss the Clause. I merely mentioned that this is an alternative method of dealing with the same subject. I think that it is very pertinent to say that it is well worth the while of the Treasury to consider whether it is not to the advantage of the collection of taxes to make it easy to make provision for the payment of those taxes. Therefore, in considering a Clause like this, which is aimed at the evasion of Surtax, the Treasury should not lose sight of the fact that these insurance policies ought to be operated without undue hardship to the person on whose estate the duty is to be levied, and without undue hardship to those other persons who are very numerous, in all cases of the death of the life owner of a large estate.

Mr. ALBERY: I presume I shall be in order in referring indirectly to an Amendment which was put down to the original Clause 12 and which has, presumably, been taken into consideration by the Government in framing their new Clause. I want to draw the attention of the Financial Secretary to the Treasury to the fact, as I understand the law at the present moment, that a certain class of insurance, paricularly life assurance, is at a very great disadvantage. It is a disadvantage which applies to the person who takes up the policy, and it is detrimental to the State as a whole and to people generally. I refer to the kind of policy which, I believe, is known as a half premium policy. Young people who have just been married and who are perhaps not earning a great deal of money and foresee the possibility of having children, frequently wish to cover themselves by insurance. They are not earning sufficient money at the time to enable them to take out as large a policy as they would desire, and it has been the custom of some insurance companies to grant them a policy and to loan to them half the premium. That has enabled people to take out a life policy for double the amount they otherwise would have been able to afford on their existing income. They hope, naturally, as frequently happens, that later in life they will be earning a bigger income, when the full premium on the policy may have decreased somewhat, and they may be able to pay off the money loaned by the in-
surance company and continue the payment of the full premium. That is in every way a desirable thing, but it appears that, owing to the framing of the law at the present time—I am not well versed in the legal aspect of the case—the law is so framed that in order to get the benefit of deduction from Income Tax in respect of the premium paid they must have actually paid the premium.
The fact that they have only paid half the premium and have borrowed the other half, has resulted, I understand, in the law courts having decided against them. Therefore they have lust any benefit that they might have got by taking out a larger insurance. The effect of that decision must be that that kind of policy will not be taken out to the extent that would otherwise have been the case. It seems to me to be entirely desirable that that kind of policy should be encouraged, and I did hope that in framing the new Clause the Chancellor of the Exchequer would have taken that into consideration. It only needed a very small change in the present law, a change of two or three words. It would not have had any material effect on the Exchequer in the loss of money, although it would have encouraged a kind of policy which is in every way desirable, and against which I cannot conceive anything that can be advanced.

Captain BOURNE: I think this Clause is a very great improvement on the original Clause, and I should like to thank the Government for accepting my suggestion that they should use the word "premium" wherever possible. I felt that, on the whole, the word "premium" is much better understood than the words "antecedent payments." I should like to have some explanation with regard to the provision in Sub-section (1) that,
no deduction shall be allowed in respect of any interest on any borrowed money which has been applied directly or indirectly towards the payment of any premium.
At first sight it would seem that this might work rather harshly in certain cases. Take the case of a man who takes out a policy, and who happens, because of bad trade or for other reasons, to have an overdraft at his bank for two or three years upon which he pays interest, because he wishes to maintain his insurance policy. I believe that in
such a case the fact that he has had to pay that interest will not bring him under this Clause. I think I am right in that assumption, because Sub-section (3) takes him out. I suggest that it is rather unfortunate that while one Subsection will bring a lot of people into the Clause another sub-section is put in which takes them out.
I should like also to know what is the object of Sub-section (3, b). I cannot see why it is any more heinous to borrow money from an insurance company than to borrow from anyone else. If the Government took up the attitude that it was iniquitous to borrow money in order to pay an insurance premium, that would be understandable, although I should not agree with them, but it seems to me a remarkable thing to say that it is a perfectly legitimate transaction to borrow money from the bank in order to pay a premium, and that under Sub-section (3, b) that transaction does not fall within the ambit of this Clause, but that if you borrow money from the insurance company with whom you have made the insurance, then the transaction falls within the ambit of this Clause, and the person who has borrowed the money is not permitted to deduct the interest on that borrowed money for the purpose of computing his income under this Clause. I am puzzled to understand why this provision has been put into the Clause, because it would seem to me that there is no greater heinousness or sin in borrowing from an insurance company than in borrowing from anyone else. I should be glad if the Financial Secretary to the Treasury would explain (1) why if an insurance premium is paid by a man who has an ordinary overdraft at the bank, that that does not come within the ambit of the Clause and (2) why it is necessary to penalise people who borrow money from an insurance company, when it is not necessary to penalise a person who borrows from a bank.

Mr. PETHICK-LAWRENCE: I will deal first with the point raised by the hon. and gallant Member for Oxford (Captain Bourne). With regard to Subsection (3, b) it is true that there is no greater heinousness in borrowing money from an insurance company than from any other source, but this paragraph is put in for administrative convenience. So far as borrowings from an insurance
company are concerned this provision only applies to money borrowed before the 6th April, 1929. All the cases where an evasion was attempted will have been cases of money borrowed from an insurance company, because there was no reason why they would have taken any other course. Once they have been warned that money borrowed from an insurance company was likely to be caught, they may have tried another method of borrowing in order to escape the net of the provision that they anticipated was likely to be spread. A year ago some sort of warning was given that an attempt would be made to catch people who attempted to evade, and therefore the date is fixed for a year back, but in future there will not be the distinction which the hon. and gallant Member for Oxford rightly characterises as being for no good reason. It is not necessary to search all cases of other borrowings. It is sufficient for us to track down those cases where a man borrowed directly from the insurance company.
With regard to the other point raised by the hon. and gallant Member, I do not think that I can give an answer which will apply to all cases. So far as the future is concerned, it will depend whether the man comes within the exemptions in Sub-section (3). Provided that he comes within the exemptions of Sub-section (3), then such borrowing as is referred to will be all right; otherwise he will be caught. As regards the right hon. and gallant Member for Ripon (Major Hills), I think that some of his objections are unreal, because they are already covered under Sub-section (3, d). With regard to the hon. Member for Gravesend (Mr. Albery), I do not quite gather what he wishes. So far as this Clause is concerned, it deals with the evasion of Surtax. I do not anticipate that any of the people with whom he is concerned come under it, and we need not go out of our way in a Clause dealing with the evasion of Surtax to give relief to an entirely different class on an entirely different proposition. A separate Clause will be required, and it would certainly be difficult to introduce it in this Clause.

Sir D. HERBERT: Does the hon. Gentleman propose to deal also with policies
in regard to wasting assets in the same way?

Mr. PETHICK-LAWRENCE: There is an Amendment dealing with that.

Lord EUSTACE PERCY: What happens supposing a man is living on an overdraft from his bank for some years and during those years he continues to pay a premium? He does not borrow from his bank specifically to pay a premium because he happens to have a current overdraft. The Financial Secretary said that whether that man is caught depends on whether he comes under the particular exemptions provided in Sub-section (3), but all the exemptions provided in Sub-section (3) depend upon the nature of the contract of assurance. What has the nature of the contract of assurance got to do with the fact that the man is going on paying his premiums, whatever the nature of the contract, and simply has a current overdraft at his bank? Is it really intended that, unless the contract of assurance is of a particular kind, the mere fact that a man has an overdraft at his bank is sufficient to make him incur the suspicion of evading Surtax by paying premiums on borrowed money?

Major HILLS: Do I understand that Sub-section (3, d) includes an endowment policy as well as a whole life policy?

Mr. PETHICK-LAWRENCE: It includes a policy which is either life or endowment and not a policy confined an endowment.

Major HILLS: Is the hon. Gentleman sure there is not some misunderstanding there? If he reads Sub-section (3, a, ii) he will find quite a different definition of an endowment policy.

Mr. PETHICK-LAWRENCE: Paragraph (a) refers to pre-Budget policies and paragraph (d) refers to post-Budget policies.

Major HILLS: Then it is clear that paragraph (d) does not exclude an endowment policy. If so, it has removed any objections I felt.

Sir D. HERBERT: I beg to move, as an Amendment to the proposed new Clause, to leave out from the word "assurance," in line 23, to the word "which," in line 24.
I put this Amendment down rather hurriedly last night when I was trying to follow what was going on here as well as to consider this Clause, and I quite realise from what the Chancellor said that it is not at all likely that he will agree to it at this stage, but at the same time I want to move it and to draw the attention of the Government Front Bench to the real point I have in mind. I should like, therefore, to explain that, in leaving out this limitation to policies which were entered into before the Budget day of this year, I am not particularly anxious to cancel that limitation except in cases of policies payable on death only. If there is any chance of the Government considering this Amendment, I should follow this Amendment by a further one so as to make this Amendment apply to a contract of insurance, whenever entered into, which ensures a fixed sum payable at death only or, secondly, one which, having been entered into before 15th April, 1930, assures the payment of a fixed sum at the expiration of a period of not less than 10 years, and so on.
I want to press upon the Government a point of view which has been very much overlooked with regard to the Clause. Policies which are payable on death only are very seldom, if ever, taken out for the main purpose of avoiding tax. No doubt it is perfectly true that the avoidance of a certain amount of tax may be one result of it, but it has been our policy to let people off a certain amount of tax in order to encourage them to assure their lives. We give them a rebate and relief from Income Tax in respect of premiums paid. In my view, the Government and the revenue ought almost to be prepared to allow further relief to the taxpayers for the purpose of encouraging them to take out genuine life assurance policies. If those policies can only become payable on death, then I do not think the revenue is going to lose because, as the hon. Member will agree, it is very difficult, if not impossible, under the law as it stands at present, for any policy taken out on a man's life and payable only after his
death to escape payment of Estate Duty on his death. Therefore, if the life assured lives out the ordinary term of life, assuming that the revenue has lost a certain amount of Surtax during his lifetime, in return for that they get on his death money which he would not have saved otherwise. They get a large sum falling into his estate which has to pay death duties and, if it is a large amount, will probably increase the rate of Estate Duty that is paid.
Therefore, I suggest very seriously that it is a mistake in this particular Clause to include in any degree at all policies which are payable only on death. I am afraid that it is too late now to press this, but none the less I feel bound, because this is the kind of thing that may be brought up again, to remind the Government of a matter they seem to have overlooked both here and in other parts of the Bill. The Government have not recognised sufficiently the immense value to the people and to the revenue of this country of an extension of life assurance, particularly in big figures. I think I am justified in moving this Amendment and hearing the views of the hon. Member in reply as to how he can really defend bringing into this Clause policies which are payable on death only.

Mr. PETHICK-LAWRENCE: I am afraid it is quite impossible to accept this Amendment. In the form in which the hon. Member moves it, it will, of course, affect not merely life assurance but pure endowment single premium policies and, even in the form in which the hon. Member says he would agree to accept his Amendment, I can see no real, genuine ground on which he ought to ask us to accept it. It would let in practically all the policies, and the whole object of the Clause would be defeated. One who chose to take out by a single premium an endowment policy, would only have to take out a policy for over 10 years to avoid entirely the provisions of this Clause. The hon. Member seems to assume that this is a normal and natural method of effecting a life assurance, but really that is not the case. The normal method of effecting a life assurance is by a series of premiums which the assurer pays out of his own pocket. The normal method of a working man is to pay a premium out of his income. Alternatively,
a man can take the course of a single premium paid out of his estate in order to secure assurance at his death. Further to that, he can, if he likes, pay a series of premiums extending over a considerable period of time, and borrow the money. The hon. Member wishes to protect him in taking the very unusual course of a single premium, the whole or a considerable part of which he borrows.
I suggest that that is a course which is so unusual, and there is so little point in taking that action, that it can only be done for the purpose of evading Surtax. And if it is said: "Well, the man wishes to do it," at least I think we are entitled to say that if he does it, he shall not evade Surtax. That is all we are asking in the Clause as it stands. If a man effects a life assurance by the wholly unnecessary method of a single premium, and borrows the money in order to pay that single premium, he shall not thereby be enabled to evade the Surtax. The whole object of this Clause is to secure that he shall not evade. I cannot accept the Amendment.

Major HILLS: I believe the hon. Member has correctly stated the facts of this Amendment. We are getting to a rather curious conclusion. A man may borrow premiums up to any amount so long as they are annual premiums, and he can deduct the interest on his borrowed money from his Surtax return, and he can in the end, if he lives a normal term of expectation, get much more off of his Surtax return than he would if he had paid a single premium and deducted the interest paid to his bank on the sum borrowed in his Surtax return. I am afraid I recognise that no concession is possible, and I agree with my hon. Friend that I cannot see any tax-dodging in the single premium. It is often used by people who want 6ecurity and absolute certainty. A man says, "I want to know that when I die, ray wife will come into a thousand, pounds, and nothing that I can do will prevent her coming into that thousand pounds," and he may go to his bank and borrow a single premium, of 40 per cent. or 60 per cent., and pay it over to the assurance company, and he knows that his wife is safe. I cannot see that he can dodge tax by that. I believe the revenue would lose more in the concession under paragraph (b), whereby a
man can borrow all the successive premiums and can deduct the interest on the money borrowed in his Surtax return.

Sir D. HERBERT: I do not propose to press the Amendment.

Amendment, by leave, withdrawn.

Sir D. HERBERT: I beg to move, as an Amendment to the proposed new Clause, to leave out the words from the word "twenty-nine," in line 30, to the end of line 34.
This Amendment was put down by me with the object of obtaining an explanation of what the Government means in paragraph (b), because I do not understand it. In order to get at the meaning of this particular Clause we must first go back for a moment to a previous provision, which exempts borrowed money in respect of policies entered into before April of this year. Now we get an exception, of interest on money borrowed before the 6th April of the previous year. That, of course, is covered by the Clause above. Then there is this qualification to it: If the money was borrowed before the 6th April, 1929, it was certainly borrowed before the 15th April, 1930. Therefore to that extent, interest on money borrowed before the 6th April, 1929, was covered by the previous Clause, which deals with a contract entered into before the 15th April, 1930. The hon. Member is, I think, with me so far. Then follows the qualification: "Unless the money so borrowed is borrowed from an assurance company, etc."
Am I right in understanding this? There are cases of money borrowed before the 6th April, 1929, which would not be excluded under the previous sub-section, because—and I think that would be the only reason—they were endowment policies for a period of less than 10 years. I think that is, as far as I can see, the only policy which can be affected here. If that is so, I realise that the particularly objectionable type of policy to which we all object—the very short-term endowment policy taken out before this year, where the man who has taken it out has got some fear of what was going to happen, and therefore went and borrowed the money from his bank in order to repay the insurance company or something like that, to endeavour to get out of this legislation—is the kind of case
which this paragraph is intended to cover. I have been trying to put my own interpretation on the remarks of the Financial Secretary a short time ago but, apparently, he does not understand my description and, therefore, I must have misunderstood his description. In these circumstances, I would ask him for a little further information as to the reasons for this paragraph, and what are the cases which can possibly come under it?

Mr. PETHICK-LAWRENCE: I think the hon. Member has stated the position correctly, but it is a little difficult to understand exactly his method of putting it. The position is that paragraph (a) definitely exempts certain pre-Budget policies from the operation of the Clause and paragraph (b) is put in for administrative purposes, largely in order not to impose an investigation when in 999 cases out of 1,000 no advantage would be gained. So far as policies which were entered into more than a year before the Budget began, if there had been a desire to evade they would have borrowed their money from the assurance company. If they do not do so and the money was borrowed in some other form, it was not for the purpose of evasion, and there is no need to trouble with those cases.

Sir D. HERBERT: But that policy is exempt under a previous paragraph if it is payable on death or has a currency of more than 10 years. This paragraph can only apply to short term endowment policies of less than 10 years. In these circumstances, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir D. HERBERT: I beg to move, as an Amendment to the proposed new Clause, in line 35, to leave out the word "mainly."
This Amendment must be taken with the following Amendment on the Order Paper—in line 35 to leave out the words "other than," and to insert instead thereof the words" together with." I hope that the Parliamentary Secretary will report to the Chancellor of the Exchequer that I have been very good in his absence and that he will be able to meet me on these two Amendments. The effect of them is to get rid of the uncertainty arising from the use of the word "mainly" and also to per-
mit the exception from this Sub-section of a policy which, quite possibly, may be just as important a part of the security as the other property which the policy supports. Let me give the Financial Secretary a common type of security on which money is borrowed, namely, the security of the life interest with a policy on the life. It is difficult in many cases to say that the life interest is the security on which the money was mainly borrowed. It would depend on the age of the life and on many other considerations, and in some cases it might be borrowed mainly on the policy. You may have this ridiculous position, that when the money was first borrowed on the life interest of a young person it would undoubtedly be mainly on the life interest, but 20 years afterwards, when the loan still remains and the life becomes old, it would be principally on the policy. There is a strong case here for a reconsideration of the wording of the Clause. This is perhaps the kind of criticism which comes from this Committee rather than from the officials of life insurance associations. It is not a point which would be as likely to occur to them as to members of my profession. But we have a strong case for asking for the omission of the word "mainly" and for the substitution of the words "together with" for the words "other than."

Mr. PETHICK-LAWRENCE: I am sorry, in spite of the sweet reasonableness of the hon. Member for Watford (Sir D. Herbert), to say that we do not feel able to accept these amendments. The essence of this exemption is that the assurance policy is something ancillary to another property. If the word "mainly" is left out, and if the words "other than" are left out and the words "together with" inserted, you may get an entire reversal of the position. The assurance policy may become the main matter and the other may become entirely ancillary to it. That being so, the door would be open, not necessarily very wide, for evasion of the precise kind which we are endeavouring to stop. This Clause with the word "mainly" has been accepted by the life offices with whom we have been in consultation, and they are very anxious that it should be carried in the form in which it has been approved. In these circum-
stances, I do not see any advantage in introducing verbal Amendments of this kind which either have little effect or have the effect of again opening the door which we hope to close by this Clause. I am sorry to have to give this reply, but I feel that we must stand firm on the Clause as it is.

Major HILLS: I can assure the Financial Secretary that this is not a verbal Amendment but an important matter, and I really think it is a concession which the Chancellor of the Exchequer might give without in the least impairing the efficiency of the Clause. All we ask is that when you allow a man to deduct interest on borrowed money from his Surtax return you should not confine that concession to cases where the money is borrowed mainly on the property, but should extend it to cases where the policy of assurance may be the main part of the security. I cannot see how you would encourage any tax dodging. A man may possess a policy on his life, on which he has paid premiums for many years. He may want to borrow money on that policy, but he cannot complete that security unless he pledges some investment to the assurance company to meet the premiums on the policy. Unless the office are assured that the premiums will be paid as long as that man lives the security is not complete. There the main security for the loan is the policy and not the investment. There is no difference in the equity of the transactions and that transaction is just as little open to tax-dodging as the other. I know the difficulty of giving concessions and perhaps I know the danger too, but I ask the Chancellor of the Exchequer to consider this matter between now and the Report stage because I think that the Mover of the Amendment has put his finger on what is a serious blot on the Clause. I think it reasonable to ask that we should have some promise that it will be considered, and I believe that my hon. Friend would be satisfied with such a promise.

Sir B. PETO: The Committee have omitted to notice that all this matter is contingent on the alternatives set out in Sub-section (3, c, i) and (3, c, ii). I understand that paragraph (c) is inserted in the Clause simply to deal with certain exceptional cases—first, the case in which the premium is payable under
a contract of assurance entered into to provide against the failure of a contingent interest in property, and, second, where the premium is the first of a series of premiums payable under a contract of assurance entered into solely to provide for the repayment of the money borrowed. I understand that assurance companies very often issue policies for a round sum, say of £10,000, at a premium of £500 a year and deduct £500 from the amount which they hand over, thus handing over £9,500. That is the contingency which is dealt with in paragraph (c, ii). Therefore, in the whole of paragraph (c), we are dealing with certain quite exceptional cases, specified in the manner I have indicated, and all this question which we have been discussing appears to me not to arise on this paragraph. I agree with the hon. Member for Watford (Sir D. Herbert) that the word "mainly" is perhaps a rather unfortunate word to use, but, after all, this is a very limited question, and the word is not inappropriate when we consider the terms of paragraph (c, i) and (c, ii). It indicates that the exception applies to money borrowed mainly on the security of property other than the assurance policy if it is one of these two exceptional cases, and only if it is one of these two exceptional cases.

Amendment negatived.

Sir D. HERBERT: I beg to move, as an Amendment to the proposed new Clause, in line 38, after the word "contingent," to insert the words "or wasting."
10.0 p.m.
It is agreed that, if a policy is taken out to support a contingent interest, it should be excepted so long as it is limited to that purpose and surely there ought to be the same protection if the termination of the interest in that property is quite certain and is not merely contingent. Let us consider the kind of thing which may happen very often in connection with a trust fund. A leasehold house is bought out of moneys advanced from a trust fund. Those moneys have to go back to the fund at some time or other and the ordinary business way of doing it is by means of what is known as a leasehold endowment policy. The man who is entitled to live in the house or is entitled to the income from the
property may only be able to get the trustees to advance the money to buy the house—if it is a leasehold house—on the understanding that he pays down a sum of money which in the course of years will provide enough, by means of insurance, for the repayment to the trust fund when the lease expires. I think that a wasting asset which requires to be protected by insurance in order to make it a substantial and continuing form of property requires as much consideration as one, the continued existence of which depends only upon an uncertain contingency.

Mr. PETHICK-LAWRENCE: I regret that in this case too we are not able to meet the wishes of the hon. Member. We feel that the words in paragraph (c, ii) are sufficient to give as much relief as people are entitled to in these cases. We have given relief in respect of interest on money borrowed which is applied to the payment of the first of a series of periodical premiums on a redemption policy, provided the premium does not exceed 10 per cent. of the sum assured. Paragraph (c, ii) we think provides all that is required for ordinary business convenience. We think that the Amendment goes a great deal further than that—indeed that it goes too far and would leave open the way to transactions which would enable avoidance of Surtax to take place.

Major HILLS: Surely paragraph (c, ii) refers only to the first premium payable and the reason for that is perfectly clear. If a man is raising money on a wasting security coupled with a policy and he borrows the first premium in order to start clear, he could not get the concession on that borrowed premium unless this paragraph were in the Clause. It is true that the Amendment goes further than that but surely it is not desired that a man who borrows on a contingent interest—an interest that might be defeated for instance by the birth of a child or some other event—should be placed in a better position than a man who borrows on a leasehold which is a far more common thing. There is an immense amount of leasehold property—by far the bigger part of London is leasehold property—and if you are giving this concession at all, surely you ought to give it in the case of a wasting security of the character of a
leasehold and not only in the case of a contingent security which may be defeated by some future event. It is a very large class of transactions, that is going on every day, and since the concession has been given, I think it ought to be extended. It cannot affect tax dodging; it is simply a business transaction. A man has a leasehold and he has to raise money on it, but he cannot do so unless he takes out a leasehold redemption policy, which will provide the money at the termination of the lease. Why should you penalise that man? If you allow the man with a contingent interest to get this concession, this man with a wasting asset should get it also.

Sir A. STEEL-MAITLAND: May I reinforce this very briefly, because it is typical of the way in which some of our suggestions have been met? An Amendment has been proposed by any hon. Friend the Member for Watford (Sir D. Herbert), to which the Financial Secretary has replied, "This is going too far. It will open the door to some other undesirable things." We do not want to do that, but it is up to the Financial Secretary to suggest an alternative. Here you introduce Clauses intended to stop tax evasion. We do not wish to prevent evasion being stopped, but if those Clauses interfere also with practices equally legitimate and right with those for which you yourselves wish to provide, surely, when we produce an Amendment in order to meet those cases, it is not enough to reply, "We do not like the look of it, and therefore we shall do nothing." The answer should be to say, "If you do not press your Amendment, we will at least try to meet these legitimate practices by some other and better way."

Sir D. HERBERT: I think we are entitled to ask for some better explanation than we have had hitherto of the refusal to accept this Amendment. The hon. Gentleman used arguments which, so far as they were applicable at all, were quite as applicable to the case of a contingent interest as to the case of wastage. I am very sorry, but I can only draw one conclusion, and that is that the hon. Gentleman and his chief have come to the conclusion that whatever happens they are net going even to consider any sort of suggestion by way of Amendments
to this Clause. I have already moved three Amendments, every one of which I withdrew, because I got the explanation that I wanted, or at least some sort of answer, which showed that there was some reason for refusing the Amendment. In this case we have none at all. I would challenge any man of business or any lawyer to tell me why a wasting asset should be treated any differently from a contingent interest, and unless the Government can give us a better answer, I shall feel bound to divide on this Amendment. I feel confident that if the right hon. Gentleman were to put this question to the business men of the City of London, he would find that they would support my contention; and until I get some very much better answer, I must continue to press the Amendment.

Mr. PETHICK-LAWRENCE: There are two things to be said in reply to the hon. Member. In the first place, the normal method of procedure in the cases mentioned is for a man to pay the premiums himself; and, in the second place, if he does borrow, we are not stopping him from carrying out the practice which the hon. Member wishes him to do.

Sir D. HERBERT: But the whole essence of it is the borrowing.

Mr. PETHICK-LAWRENCE: All that we say is that if he adopts the particular method which the hon. Member envisages, he shall not thereby escape the Surtax which otherwise he would have to pay. These Amendments have been very carefully considered, and not only so, but the form of words which we have inserted in the Clause has been agreed with a, very large number of people who have thought them out very carefully. They have not asked for additional Amendments, and under those circumstances it is not from any sense of discourtesy, but after very careful consideration, that the words in the Clause seem to us not to open the door to evasion, and they have been accepted by those who, from the other point of view, have been looking into the matter.

Sir A. STEEL-MAITLAND: The Financial Secretary has just repeated the kind of argument which both the Chancellor of the Exchequer and he disclaimed any wish to use at the beginning of the discussion of this Clause. The greater part of what he said amounts to this,
that they have agreed this Clause with the insurance companies outside, and that that ought to be sufficient. It is true that consultation with the insurance companies has resulted in an infinitely better Clause than was the case before, but that it should be the ultimate word of wisdom on every conceivable point, which could not possibly be amended, is absurd.

Mr. CHURCHILL: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
I am most anxious that nothing should occur to raise the temperature of this debate at a season of the year when already the physical temperature runs unusually high in these latitudes, and therefore, as I indicated a little earlier in our proceedings, in the hope that we may accelerate our proceedings as much as possible, I ask leave to move to report Progress in order to give to the Chancellor of the Exchequer an opportunity of telling us now with fuller knowledge what he thinks should be the immediate course of our discussion.

Mr. P. SNOWDEN: I regret to have to say that I am not in possession of any fuller knowledge now than I was some two hours ago, and I am sorry that I cannot satisfy the right hon. Gentleman to any greater extent than when I last spoke. The debate on this Clause has gone on longer than I expected. I do not complain I simply state the fact. When I last spoke, I said I hoped that we might be able to make some inroad upon the new Clauses this evening, and I have not abandoned that hope. I shall certainly not ask the Committee to sit after 12 o'clock, and I hope that between now and then we may make reasonable progress. I am afraid I cannot say anything beyond that.

Mr. CHURCHILL: Of course, I am sorry the right hon. Gentleman is not able to give any further indication of his wishes than that which has just fallen from him. This Clause on which we have been engaged is one of very deep interest, affecting as it does at so many points the life of the community. The right hon. Gentleman would, I am sure, be well advised to come to some conclusion in his mind, because we feel, although we may be allowed to go to bed to-night at a reasonable hour, that
he would have a grievance—not a legitimate grievance, out a natural grievance, not a grievance against us, but a grievance against things in general, if he had not made considerable progress with the new Clauses. There is not much chance of that, and he will be well aware of the difficulties that lay before us. This particular Clause, although the right hon. Gentleman has agreed it with the experts and the authorities of the life assurance companies, is a matter which cannot be hurried. We have our views and they are disinterested views, and we cannot leave this on the Statute Book simply in the form in which it is arranged with the eager tax-gatherer and these great vested interests in the life assurance companies. We must examine it, and make sure that legislation is not the result of any particular deal or arrangement between the Government and any particular section of the community, but that it represents the settled conviction, after searching examination, of the House of Commons and of the great mass of the electorate of which we are the servants.
I trust that we may get through this Clause before the hour of midnight strikes to wake Cinderella from her dream, but even so, the next step will be to embark upon a question of extraordinary complexity and one which appeals in a special manner to almost every family among the Income Tax payers—the question whether Income Tax should be reckoned jointly or severally between people who are living together united by the matrimonial tie. I am not going to anticipate that on a Motion to report Progress, but it seems to me that this is a subject which arouses the combative instincts of millions of householders throughout the land, and it is only natural, and indeed inevitable, that these combative instincts, so widely excited, should find their representative repercussions in our attitude upon this side of the Committee. We shall have to address ourselves with very great zest and zeal to these matters if we are to make any progress to-night, and rather than delay the proceedings I will ask leave, in order to facilitate progress, to withdraw my Motion, which I made in the hope that the Chancellor of the Exchequer would be able, by a wave of a fairy wand, to relieve us of many of our anxieties. He is not able to do so, and
therefore I think the best thing I can do is to ask leave to withdraw the Motion, so that we may immediately address ourselves to the serious difficulties that lay before us.

Motion, by leave, withdrawn.

Question again proposed, "That those words be there inserted."

Sir B. PETO: In moving this Clause, the Chancellor states that he could not accept any substantial Amendments which would change its main purpose. My hon. Friend the Member for Watford (Sir D. Herbert) moved a series of Amendments which were mere drafting Amendments, and would not have changed the purpose which the Chancellor had in moving this Clause. We have got now to an Amendment which aims at liberating from the operations of this Clause a number of ordinary commercial transactions which are much more frequent than those which are expressly exempted by this particular Sub-section. The Financial Secretary said he could not accept the Amendment because he could see no reason why those ordinary commercial transactions should not be put through if the borrower of the money were prepared to pay the premium in the ordinary way without borrowing money at all. Paragraph (c) deals expressly with an exception governed by the words of Sub-section (3), which says that the Clause shall not apply to
interest on money borrowed mainly on the security of property other than a contract of assurance, if the premium in question either
(i) is payable under a contract of assurance entered into in order to provide against the failure of a contingent interest
And there my right hon. Friend proposes to put in the words "or wasting interest." If this Clause were not put into this Bill, this type of transaction would never be questioned, and whatever rights the borrower of this money has in respect of the interest on the borrowed money, setting it as against his ordinary income, would exist. The Finan-

cial Secretary says, however, that he cannot accept the Amendment, not because of any attempt to evade Surtax, and not because he says this is a type of transaction that ought not to be included; in fact, he really gives us no reason whatever why money borrowed under a contract of insurance to provide against the failure of a contingent interest should be exempt, but not a contract of insurance to provide for a wasting interest.

I rose only to point out to the Chancellor that dais is not an Amendment of the kind which he said he could not accept as being an Amendment directed at the root purpose of the Clause. This Amendment merely points out a flaw in the Clause, which would not have occurred if my right hon. Friend the Member for Watford had been brought into consultation, or if the Treasury had consulted anybody representing the ordinary commercial interests of the country, or solicitors, who are as frequently concerned in these transactions. [An HON. MEMBER: "Or Lord Beaverbrook!"] Naturally they look at it from the point of view of the insurance business, and I think the Chancellor of the Exchequer ought to look at this question with an open mind. There is nothing in this Amendment which will prevent full accomplishment of his purpose. I appeal to the right hon. Gentleman to say that he will look into the question between now and the Report stage, and I hope he will consult some of those gentlemen who can advise him on this point. I am sure he can consult some of the legal members of the community, who will be able to tell him what is the ordinary practice, and whether there is any evasion of this Clause or not, When he has had an opportunity of consulting those advisers, I am sure he will see the wisdom of inserting this Amendment on Report.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 131: Noes, 258.

Division No. 411.]
AYES
[10.26 p.m.


Acland-Troyte, Lieut.-Colonel
Balniel, Lord
Bracken, B.


Albery, Irving James
Beamish, Rear-Admiral T. P. H.
Braithwaite, Major A. N.


Allen, Sir J. Sandeman (Liverp'l., W.)
Birchall, Major Sir John Dearman
Brass, Captain Sir William


Atholl, Duchess of
Bird, Ernest Roy
Buchan, John


Baillie-Hamilton, Han. Charles W.
Boothby, R. J. G.
Bullock, Captain Malcolm


Baldwin, Rt. Hon. Stanley (Bewdley)
Bourne, Captain Robert Croft
Cadogan, Major Hon. Edward


Balfour, George (Hampstead)
Bowyer, Captain Sir George E. W.
Christie, J. A.


Balfour, Captain H. H. (I. of Thanet)
Boyce, H. L.
Churchill, Rt. Hon. Winston Spencer


Cockerill, Brig.-General Sir George
Henderson, Capt. R. R. (Oxf'd, Henley)
Reid, David D. (County Down)


Colman, N. C. D.
Heneage, Lieut.-Colonel Arthur P.
Remer, John R.


Colville, Major D. J.
Herbert, Sir Dennis (Hertford)
Rentoul, Sir Gervais S.


Cranborne, Viscount
Hills, Major Rt. Hon. John Walter
Reynolds, Col. Sir James


Crichton-Stuart, Lord C.
Howard-Bury, Colonel C. K.
Roberts, Sir Samuel (Ecclesall)


Cunliffe-Lister, Rt. Hon. Sir Philip
Hudson, capt. A. U. M. (Hackney, N.)
Russell, Alexander West (Tynemouth)


Dalkeith, Earl of
Iveagh, Countess of
Salmon, Major I.


Dalrymple-White, Lt.-Col. Sir Godfrey
Kindersley, Major G. M.
Samuel, A. M. (Surrey, Farnham)


Davidson, Rt. Hon. J. (Hertford)
King, Commodore Rt. Hon. Henry D.
Samuel, Samuel (W'dsworth, Putney)


Davies, Dr. Vernon
Knox, Sir Alfred
Sandeman, Sir N. Stewart


Davies, Maj. Geo. F. (Somerset, Yeovil)
Lane Fox, Col. Rt. Hon. George R.
Savery, S. S.


Davison, Sir W. H. (Kensington, S.)
Law, Sir Alfred (Derby, High Peak)
Skelton, A. N.


Dawson, Sir Philip
Leigh, Sir John (Clapham)
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Dixey, A. C.
Leighton, Major B. E. P.
Smith-Carington, Neville W.


Dixon, Captain Rt. Hon. Herbert
Llewellin, Major J. J.
Somerville, A. A. (Windsor)


Dugdale, Capt. T. L.
Locker-Lampson, Rt. Hon. Godfrey
Somerville, D. G. (Willesden, East)


Eden, Captain Anthony
McConnell, Sir Joseph
Spender-Clay, Colonel H.


Edmondson, Major A. J.
Macquisten, F. A.
Steel Maitland, Rt. Hon. Sir Arthur


Falle, Sir Bertram G.
Maitland, A. (Kent, Faversham)
Thomson, Sir F.


Ferguson, Sir John
Marjoribanks, E. C.
Tinne, J. A.


Fielden, E. B.
Mason, Colonel Glyn K.
Titchfield, Major the Marquess of


Ford, Sir P. J.
Merriman, Sir F. Boyd
Train, J.


Forestier-Walker, Sir L.
Mitchell-Thomson, Rt. Hon. Sir W.
Tryon, Rt. Hon. George Clement


Ganzoni, Sir John
Mond, Hon. Henry
Vaughan-Morgan, Sir Kenyan


Gibson, C. G. (Pudsey & Otley)
Monsell, Eyres, Com. Rt. Hon. Sir B.
Ward, Lieut.-Col. Sir A. Lambert


Glyn, Major R. G. C.
Moore, Sir Newton J. (Richmond)
Warrender, Sir Victor


Gower, Sir Robert
Moore, Lieut.-Colonel T. C. R. (Ayr)
Wells, Sydney R.


Graham, Fergus (Cumberland, N.)
Morrison, W. S. (Glos., Cirencester)
Williams, Charles (Devon, Torquay)


Greene, W. P. Crawford
Morrison-Bell, Sir Arthur Clive
Windsor-Clive, Lieut.-Colonel George


Grenfell, Edward C. (City of London)
Muirhead, A. J.
Wolmer, Rt. Hon. Viscount


Gretton, Colonel Rt. Hon. John
O'Connor, T. J.
Womersley, W. J.


Guinness, Rt. Hon. Walter E.
Oman, Sir Charles William C.
Worthington-Evans, Rt. Hon. Sir L.


Hacking, Rt. Hon. Douglas H.
O'Neill, Sir H.
Young, Rt. Hon. Sir Hilton


Hamilton, Sir George (Ilford)
Peake, Capt. Osbert



Hanbury, C.
Percy, Lord Eustace (Hastings)
TELLERS FOR THE AYES.—


Harvey, Major S. E. (Devon, Totnes)
Peto, Sir Basil E. (Devon, Barnstaple)
Sir George Penny and Captain


Haslam, Henry C.
Ramsbotham, H.
Wallace.


NOES.


Adamson, Rt. Hon. W. (Fife, West)
Cove, William G.
Horrabin, J. F.


Adamson, W. M. (Staff., Cannock)
Daggar, George
Hudson, James H. (Huddersfield)


Addison, Rt. Hon. Dr. Christopher
Dallas, George
Hunter, Dr. Joseph


Aitchison, Rt. Hon. Craigie M.
Davies, E. C. (Montgomery)
Hutchison, Maj.-Gen. Sir R.


Alpass, J. H.
Dudgeon, Major C. R.
Isaacs, George


Ammon, Charles George
Duncan, Charles
Jenkins, W. (Glamorgan, Neath)


Arnott, John
Ede, James Chuter
John, William (Rhondda, West)


Aske, Sir Robert
Edge, Sir William
Johnston, Thomas


Attlee, Clement Richard
Edmunds, J. E.
Jones, F. Llewellyn- (Flint)


Ayles, Walter
Edwards, E. (Morpeth)
Jones, Morgan (Caerphilly)


Baker, John (Wolverhampton, Bilston)
Egan, W. H.
Jowett, Rt. Hon. F. W.


Baldwin, Oliver (Dudley)
Elmley, Viscount
Jowitt, Rt. Hon. Sir W. A.


Barnes, Alfred John
Foot, Isaac
Kelly, W. T.


Barr, James
Forgan, Dr. Robert
Kennedy, Thomas


Batey, Joseph
Freeman, Peter
Kinley, J.


Bellamy, Albert
Gardner, B. W. (West Ham, Upton)
Lang, Gordon


Benn, Rt. Hon. Wedgwood
Gardner, J. P. (Hammersmith, N.)
Lansbury, Rt. Hon. George


Bennett, Capt. Sir E. N. (Cardiff C.)
Gibbins, Joseph
Lathan, G.


Bennett, William (Battersea, South)
Gibson, H. M. (Lancs, Mossley)
Law, Albert (Bolton)


Benson, G.
Gill, T. H.
Law, A. (Rosendale)


Bentham, Dr Ethel
Glassey, A. E.
Lawrence, Susan


Bevan, Aneurin (Ebbw Vale)
Gossling, A. G.
Lawrie, Hugh Hartley (Stalybridge)


Birkett, W. Norman
Graham, D. M. (Lanark, Hamilton)
Lawson, John James


Bondfield, Rt. Hon. Margaret
Graham, Rt. Hon. Wm. (Edin., Cent.)
Lawther, W. (Barnard Castle)


Bowen, J. W.
Granville, E.
Leach, W.


Brockway, A. Fenner
Gray, Milner
Lee, Frank (Derby, N. E.)


Brooke, W.
Grenfell, D. R. (Glamorgan)
Lee, Jennie (Lanark, Northern)


Brothers, M.
Griffith, F. Kingsley (Middlesbro' W.)
Lees, J.


Brown, C. W. E. (Notts, Mansfield)
Groves, Thomas E.
Lewis, T. (Southampton)


Brown, Ernest (Leith)
Grundy, Thomas W.
Lindley, Fred W.


Brown, W. J. (Wolverhampton, West)
Hall, F. (York, W. R., Normanton)
Lloyd, C. Ellis


Buchanan, G.
Hall, G. H. (Merthyr Tydvil)
Logan, David Gilbert


Burgess, F. G.
Hall, Capt. W. P. (Portsmouth, C.)
Longbottom, A. W.


Burgin, Dr. E. L.
Hamilton, Mary Agnes (Blackburn)
Longden, F.


Buxton, C. R. (Yorks. W. R. Elland)
Hardie, George D.
Lowth, Thomas


Caine, Derwent Hall-
Harris, Percy A.
Macdonald, Gordon (Ince)


Cameron, A. G.
Hartshorn, Rt. Hon. Vernon
MacDonald, Rt. Hon. J. R. (Seaham)


Charleton, H. C.
Hastings, Dr. Somerville
McElwee, A.


Chater, Daniel
Haycock, A. W.
McEntee, V. L.


Church, Major A. G.
Hayes, John Henry
McGovern, J. (Glasgow, Shettleston)


Clarke, J. S.
Herriotts, J.
McKinlay, A.


Cluse, W. S.
Hirst, G. H. (York W. R. Wentworth)
MacLaren, Andrew


Clynes, Rt. Hon. John R.
Hirst, W. (Bradford, South)
Maclean, Neil (Glasgow, Govan)


Cocks, Frederick Seymour
Hoffman, P. C.
Malone, C. L'Estrange (N'thampten)


Compton, Joseph
Hollins, A.
Mander, Geoffrey le M.




Mansfield, W.
Quibell, D. J. K.
Stamford, Thomas W.


March, S.
Ramsay, T. B. Wilson
Stephen, Campbell


Marcus, M.
Rathbone, Eleanor
Strachey, E. J. St. Loe


Markham, S. F.
Raynes, W. R.
Strauss, G. R.


Marley, J.
Richards, R.
Sullivan, J.


Marshall, Fred
Richardson, R. (Houghton-le-Spring)
Sutton, J. E.


Mathers, George
Riley, F. F. (Stockton-on-Tees)
Taylor, R. A. (Lincoln)


Matters, L. W.
Ritson, J.
Thurtle, Ernest


Maxton, James
Romeril, H. G.
Tinker, John Joseph


Messer, Fred
Rosbotham, D. S. T.
Toole, Joseph


Middleton, G.
Rowson, Guy
Tout, W. J.


Millar, J. D.
Russell, Richard John (Eddisbury)
Townend, A. E.


Mills, J. E.
Salter, Dr. Alfred
Turner, B.


Milner, Major J.
Samuel, Rt. Hon. Sir H. (Darwen)
Vaughan, D. J.


Montague, Frederick
Samuel, H. Walter (Swansea, West)
Viant, S. P.


Morgan, Dr. H. B.
Sanders, W. S.
Walkden, A. G.


Morley, Ralph
Sandham, E.
Walker, J.


Morris, Rhys Hopkins
Sawyer, G. F.
Wallace, H. W.


Morrison, Robert C. (Tottenham, N.)
Scrymgeour, E.
Walters, Rt. Hon. Sir J. Tudor


Mort, D. L.
Scurr, John
Watkins, F. C.


Moses, J. J. H.
Sexton, James
Watson, W. M. (Dunfermline)


Mosley, Lady C. (Stoke-on-Trent)
Shaw, Rt. Hon. Thomas (Preston)
Wellock, Wilfred


Muff, G.
Shepherd, Arthur Lewis
Welsh, James (Paisley)


Muggeridge, H. T.
Sherwood, G. H.
Welsh, James C. (Coatbridge)


Murnin, Hugh
Shield, George William
West, F. R.


Nathan, Major H. L.
Shiels, Dr. Drummond
Westwood, Joseph


Naylor, T. E.
Shillaker, J. F.
White, H. G.


Newman, Sir R. H. S. D. L. (Exeter)
Shinwell, E.
Whiteley, Wilfrid (Birm., Ladywood)


Noel Baker, P. J.
Short, Alfred (Wednesbury)
Whiteley, William (Blaydon)


Oldfield, J. R.
Simmons, C. J.
Wilkinson, Ellen C.


Oliver, P. M. (Man., Blackley)
Simon, E. D. (Manch'ter, Withington)
Williams, David (Swansea, East)


Palin, John Henry
Sinclair, Sir A. (Caithness)
Williams Dr. J. H. (Llanelly)


Paling, Wilfrid
Sinkinson, George
Wilson, C. H. (Sheffield, Attercliffe)


Palmer, E. T.
Sitch, Charles H.
Wilson, J. (Oldham)


Parkinson, John Allen (Wigan)
Smith, Ben (Bermondsey, Rotherhithe)
Wilson, R. J. (Jarrow)


Perry, S. F.
Smith, Frank (Nuneaton)
Winterton, G. E. (Leicester, Loughb'gh)


Pethick-Lawrence, F. W.
Smith, Tom (Pontefract)
Wise, E. F.


Phillips, Dr. Marion
Smith, W. R. (Norwich)
Wood, Major McKenzie (Banff)


Pole, Major D. G.
Snell, Harry
Young, R. S. (Islington, North)


Potts, John S.
Snowden, Rt. Hon. Philip



Price, M. P.
Snowden, Thomas (Accrington)
TELLERS FOR THE NOES.—


Pybus, Percy John
Sorensen, R.
Mr. Charles Edwards and Mr. T.




Henderson.

Captain BOURNE: I beg to move, as an Amendment to the proposed new Clause, to leave out Sub-section (4).
The bulk of this Clause has been agreed between the Treasury and the insurance companies, but I am given to understand, that as far as Sub-section (4) is concerned, there is no agreement whatever, as the insurance companies regard it as a matter with which they are not concerned. It is a power to the special commissioners to ask for certain extra particulars, and I am extremely puzzled to see why any such power should be required. The Section of the Act of 1922 which the Clause purports to extend runs as follows:
The special commissioners may, whether an assessment to Super-tax has been made or not, require any individual who has been required to make a return of his total income for the purposes of Super-tax to furnish to them within such time as they may prescribe, not being less than twenty-eight days, such particulars as to the several sources of his income and the amount arising from each source, and as to the nature and the amount of any deductions claimed to be allowed therefrom, as they consider necessary.
I fail to see what extra information the special commissioners require in order to deal with single premium policies. Is this an attempt to give them power to make inquiries of the insurance companies? Up to now we have strenuously resisted claims that have been made on several occasions on the part of the Inland Revenue officials that they should have the right to demand particulars from insurance companies or banks in respect of any individual's private transactions. I do not know if the Government wish to depart from the present system, which has worked well for the best part of a century, but unless they want to enable the special commissioners to obtain information from sources that are at present closed to them, I fail to see why this Sub-section is required.

Mr. PETHICK-LAWRENCE: I can give the hon. and gallant Gentleman the assurance he desires. As I understand it, he is anxious to be assured that the object and intention of the use of these words is not to give the Commissioners power to inquire of all and sundry as to the affairs of the taxpayer. The object of this Clause is simply to give
them sufficient power to inquire of the taxpayer, and the taxpayer alone. [An HON. MEMBER: "They do that now!"] I am advised that the words which already exist in the Finance Act, 1922, are not sufficient to cover the amount of inquiry of the taxpayer which would be necessary for this information. They are only to inquire from the Surtax payer particulars of the nature and the amount of any deduction claimed to be allowed. These words by themselves would not empower the commissioners to pursue inquiries which would be likely to be necessary for the administration of this Clause. [An HON. MEMBER: "What inquiry?"] The inquiry to find out whether the deductions which the taxpayer is making on account of interest relate to the deductions envisaged in this Clause. It is for that purpose, and that purpose alone, that these words are inserted. They are not inserted with a view to enabling commissioners to inquire of other persons than the taxpayers.

Sir A. STEEL-MAITLAND: May again point out how extremely inadequate are the explanations which the hon. Member has given. He gives us this assurance, but really anyone will see by the ordinary reading of the Clause that they can ask for such particulars as to the several sources of a man's income and the amount arising from such sources, and for particulars of the nature and amount of any deduction claimed to be allowed therefrom as are considered necessary. It is difficult to understand how there can be anything more which the hon. Member can possibly want. It is not sufficient to be told that this is not enough. We want to know in what respect it is not enough. With regard to Sub-section (3), we were told that one reason why it was inadvisable to alter anything at all was that it was the subject of an agreement with the insurance companies outside. I would like to ask, so as to make sure that we may not inconvenience the Government from that point of view or help the tax evader by upsetting the agreement with the insurance companies: Was this any part of the agreement with the insurance companies? If it was, perhaps it may influence us. When we are told that a Clause is an agreed Clause we want to know whether the terms of this part of
the Clause were specially agreed upon also. The main point is that they are the most extraordinary wide words, and it is not enough for the Financial Secretary simply to give the answer that he has given to the Committee. We have a right to know in some detail in what respect the words are sufficient. There are two words which we are asked to pass to which I take a peculiar dislike:
shall be extended so as to enable the special commissioners to require such particulars with respect to deductions and otherwise.
In all this type of legislation, the one thing that is thoroughly undesirable is to give vague powers such as are conveyed in the words "and otherwise." Unless we can get some detailed information, we shall not be satisfied with the Financial Secretary's statement that "these are the words, and they are sufficient." We say that these words give powers to the Government to have a roving commission.

Mr. PETHICK-LAWRENCE: No.

Sir A. STEEL-MAITLAND: The Financial Secretary says "no." Let him read the words of the powers that he has already got. Then let him read the words of the new Clause which extend the power quite indefinitely:
to require such particulars with respect to deductions and otherwise as they may consider necessary.
On reading this Clause there is no human being who does not realise that whether the Treasury want to have the powers of a roving commission or not, that is what is being given by this Sub-section. No one can misunderstand the plain meaning in that respect.

Mr. BOOTHBY: It seems to me that the Government are Attempting to do the very thing which this Committee, if it is to serve any purpose, exists to stop, or to inquire into. The Committee ought not to pass such a provision unless some full and adequate reason is given for it. The Financial Secretary cannot claim to have satisfied the Committee that there is a good and just cause for inserting this particular Sub-section. Is this part of the agreement with the life offices? It it very important that we should know that. If the life offices think that this additional power is essential, then we should have to consider very seriously the
advisability of dividing against it, bat if it is no part of the agreement, then it is a little additional section slipped into the Finance Bill by the Inland Revenue authorities, and it is that sort of thing that we exist to stop. If this Committee is going to serve any useful purpose, it ought to be able to stand up on behalf of the taxpayer against the steadily encroaching powers of bureaucracy, which have already reached almost intolerable proportions. I do not think that we can be satisfied with the sort of general assurance and the quite inadequate assurance given by the Financial Secretary. I am not certain that an assurance of that kind is of any use. If we pass the Clause as it stands, with this Sub-section in it, it does not matter how many assurances the Financial Secretary may have given they will not affect the law as it will exist, and the judgment of the Courts will not be affected by any assurance which the Financial Secretary has thought fit to make. If we are not to divide against this Sub-section we must ask why, if there is no good and just reason, these extra additional roving and very dangerous powers are demanded by the Government.

Mr. A. M. SAMUEL: The Financial Secretary ought not to try to brush us aside in this way. Can he not make a definite statement? Either the Treasury has made up its mind or it has not. The Treasury must know what it wants and what it seeks to find out and, if it does, what reason is there for trying to hide it? What are these "such particulars"? What does "otherwise" cover?

Sir B. PETO: I should like to give the answer that we cannot get from the Financial Secretary to the Treasury. The words of Sub-section (4) of the new Clause are absolutely identical with the words of Sub-section (4) in the old Clause, and therefore it is perfectly clear that they could not have been any part of any arrangement or agreement with the assurance companies for the reconstruction of this Clause. They were in the old Clause, and they are not part of the new Clause except that they are imported verbatim into the new Clause. Therefore, any arrangement as to the Clause cannot possibly apply to Subsection (4). We can get no answer what-
ever to the questions that we have put as to why, when in the Finance Act of 1922 very specific powers were given, ample powers in every direction, they are not enough. We want to know why the Treasury cannot tell us in what way these powers are not sufficient, and why they should put in these words that give them power to do anything that they choose, to make these inquiries and, even beyond that, to investigate under such wide words as "or otherwise," which covers anything in the universe not specified in the Sub-section. In those circumstances I do not see any obligation, moral or otherwise, to assist this proposal.

Mr. CHARLES WILLIAMS: I was very interested just now to hear the Secretary to the Treasury state that, as far as the special commissioners are concerned, they already had very considerable powers, but for some reasons were not quite certain whether they had sufficient powers to act under this Clause. With his usual thoughtfulness he deliberately abstained from telling the Committee how those powers had failed or in what way they had broken down. Unless he makes out a prima facie case to show that his actual powers are not sufficient for the carrying out of this Clause, I fail to see how he can ask the Committee to give such wide powers. He should tell us quite simply in what way these particular powers have broken down. He did not tell us, because he knows perfectly well that he has got full and adequate powers, and that the commissioners have perfect powers to extract any information they wish.
The real reason why he refused to give an answer was that he knew, as has been pointed out by my right hon. Friend the Member for Tamworth (Sir A. Steel-Maitland), that those two seemingly innocent words "and otherwise have been slipped into this Bill, giving them power to go far outside what was meant in the original part of this Clause. I have listened to the right hon. Gentleman and to the Financial Secretary with considerable patience from time to time during this Finance Bill, and I have not seen any part which was quite so vague and quite so deliberately going outside those powers which they needed. It has been laid down by several Members of the party on this side of the House that you
must not, as a Committee of the House of Commons, lay down vague and indefinite words for your civil servants, however excellent they may be and however well they exercise their powers. You should rather tell them how and where to exercise their powers. For that reason, in consideration of the last three lines of this Sub-section, we should refuse to give the Government the powers of this new Clause.
One other point has been raised. I wonder why it is that the Government feel themselves unable to give a direct answer to a quite simple question as to whether this was part of the agreement between the taxing authorities and certain companies outside? It is all very well to have these agreements arrived at in the background. I am not so fond of them. It would be far better if matters connected with the taxation of the people of the country were worked out on the Floor of the House of Commons. I quite realise that in a business of this kind, unless you get direct knowledge of that business, which can only

be given to the Government by the people who are in the business, it is almost impossible to accomplish what we wish to do here. But when you come down to the direct taxpayer, as you are in this Sub-section, it is only right that we should have the clearest definition, of what the Chancellor wants, in order that no chance should be left of oppression being put upon individuals. The position of those individuals should be made perfectly clear and simple under this new Sub-section, and how far they will be interfered with by the Commissioners. The Commissioners have the respect, I think, of all sections of the community, and it is grossly unfair to put them in the vague and indefinite position in which this Clause does put them, and about which we are trying to elicit some information from the Chancellor.

Question put. "That, the words proposed to be left out stand part of the proposed new Clause."

The Committee divided: Ayes, 247: Noes, 125.

Division No. 412.]
AYES.
[10.59 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Cocks, Frederick Seymour
Hayes, John Harvey


Adamson, W. M. (Staff., Cannock)
Compton, Joseph
Herriotts, J.


Addison, Rt. Hon. Dr. Christopher
Daggar, George
Hirst, G. H. (York W. R. Wentworth)


Aitchison, Rt. Hon. Craigie M.
Dallas, George
Hirst, W. (Bradford, South)


Alpass, J. H.
Davies, E. C. (Montgomery)
Hoffman, P. C.


Ammon, Charles George
Dudgeon, Major C. R.
Hollins, A.


Arnott, John
Duncan, Charles
Horrabin, J. F.


Aske, Sir Robert
Ede, James Chuter
Hudson, James H. (Huddersfield)


Attlee, Clement Richard
Edge, Sir William
Hunter, Dr. Joseph


Ayles, Walter
Edmunds, J. E.
Hutchison, Maj.-Gen. Sir R.


Baker, John (Wolverhampton, Bilston)
Edwards, C. (Monmouth, Bedwellty)
Isaacs, George


Baldwin, Oliver (Dudley)
Edwards, E. (Morpeth)
Jenkins, W. (Glamorgan, Neath)


Barnes, Alfred John
Egan, W. H.
John, William (Rhondda, West)


Barr, James
Elmley, Viscount
Johnston, Thomas


Batey, Joseph
Foot, Isaac
Jones, F. Llewellyn. (Flint)


Bellamy, Albert
Freeman, Peter
Jones, Morgan (Caerphilly)


Benn, Rt. Hon. Wedgwood
Gardner, B. W. (West Ham, Upton)
Jowett, Rt. Hon. F. W.


Bennett, Capt. Sir E. N. (Cardiff C.)
Gardner, J. P. (Hammersmith, N.)
Jowitt, Rt. Hon. Sir W. A.


Bennett, William (Battersea, South)
Gibbins, Joseph
Kelly, W. T.


Benson, G.
Gibson, H. M. (Lancs, Mossley)
Kennedy, Thomas


Bentham, Dr. Ethel
Gill, T. H.
Kinley, J.


Birkett, W. Norman
Gillett, George M.
Lang, Gordon


Bondfield, Rt. Hon. Margaret
Glassey, A. E.
Lansbury, Rt. Hon. George


Bowen, J. W.
Gossling, A. G.
Lathan, G.


Brockway, A. Fenner
Graham, D. M. (Lanark, Hamilton)
Law, Albert (Bolton)


Brooke, W.
Graham, Rt. Hon. Wm. (Edin., Cent.)
Law, A. (Rosendale)


Brothers, M.
Granville, E.
Lawrence, Susan


Brown, C. W. E. (Notts, Mansfield)
Gray, Milner
Lawrie, Hugh Hartley (Stalybridge)


Brown, Ernest (Leith)
Grenfell, D. R. (Glamorgan)
Lawson, John James


Brown, W. J. (Wolverhampton, West)
Griffith, F. Kingsley (Middlesbro' W.)
Lawther, W. (Barnard Castle)


Buchanan, G.
Groves, Thomas E.
Leach, W.


Burgess, F. G.
Grundy, Thomas W.
Lee, Frank (Derby, N. E.)


Burgin, Dr. E. L.
Hall, F. (York, W. R., Normanton)
Lee, Jennie (Lanark, Northern)


Buxton, C. R. (Yorks. W. R. Elland)
Hall, G. H. (Merthyr Tydvil)
Lees, J.


Caine, Derwent Hall-
Hall, Capt. W. P. (Portsmouth, C.)
Lewis, T. (Southampton)


Cameron, A. G.
Hamilton, Mary Agnes (Blackburn)
Lindley, Fred W.


Charleton, H. C.
Hardie, George D.
Llcyd, C. Ellis


Chater, Daniel
Harris, Percy A.
Logan, David Gilbert


Clarke, J. S.
Hartshorn, Rt. Hon. Vernon
Longbottom, A. W.


Cluse, W. S.
Hastings, Dr. Somerville
Longden, F.


Clynes, Rt. Hon. John R.
Haycock, A. W.
Lowth, Thomas


Lunn, William
Perry, S. F.
Snowden, Thomas (Accrington)


Macdonald, Gordon (Ince)
Pethick-Lawrenee, F. W.
Sorensen, R.


MacDonald, Rt. Hon. J. R. (Seaham)
Phillips, Dr. Marion
Stamford, Thomas W.


McElwee, A.
Potts, John S.
Stephen, Campbell


McEntee, V. L.
Price, M. P.
Strauss, G. R.


McGovern, J. (Glasgow, Shettleston)
Pybus, Percy John
Sullivan, J.


McKinlay, A.
Quibell, D. J. K.
Sutton, J. E.


MacLaren, Andrew
Ramsay, T. B. Wilson
Taylor, R. A. (Lincoln)


Maclean, Neil (Glasgow, Govan)
Rathbone, Eleanor
Thurtle, Ernest


Malone, C. L'Estrange (N'thampton)
Raynes, W. R.
Tinker, John Joseph


Mander, Geoffrey le M.
Richards, R.
Toole, Joseph


Mansfield, W.
Richardson, R. (Houghton-le-Spring)
Tout, W. J.


Marcus, M.
Riley, F. F. (Stockton-on-Tees)
Townend, A. E.


Markham, S. F.
Ritson, J.
Turner, B.


Marley, J.
Romeril, H. G.
Vaughan, D. J.


Marshall, Fred
Rosbotham, D. S. T.
Viant, S. P.


Mathers, George
Rowson, Guy
Walkden, A. G.


Matters, L. W.
Salter, Dr. Alfred
Walker, J.


Maxton, James
Samuel, Rt. Hon. Sir H. (Darwen)
Wallace, H. W.


Messer, Fred
Samuel, H. Walter (Swansea, West)
Watkins, F. C.


Middleton, G.
Sanders, W. S.
Watson, W. M. (Dunfermline)


Millar, J. D.
Sawyer, G. F.
Wellock, Wilfred


Mills, J. E.
Scurr, John
Welsh, James (Paisley)


Milner, Major J.
Sexton, James
Welsh, James C. (Coatbridge)


Montague, Frederick
Shaw, Rt. Hon. Thomas (Preston)
West, F. R.


Morgan, Dr. H. B.
Shepherd, Arthur Lewis
White, H. G.


Morley, Ralph
Sherwood, G. H.
Whiteley, Wilfrid (Birm., Ladywood)


Morris, Rhys Hopkins
Shield, George William
Whiteley, William (Blaydon)


Morrison, Herbert (Hackney, South)
Shiels, Dr. Drummond
Wilkinson, Ellen C.


Morrison, Robert C. (Tottenham, N.)
Shillaker, J. F.
Williams, David (Swansea, East)


Mort, D. L.
Shinwell, E.
Williams, Dr. J. H. (Llanelly)


Moses, J. J. H.
Short, Alfred (Wednesbury)
Wilson, C. H. (Sheffield, Attercliffe)


Mosley, Lady C. (Stoke-on-Tront)
Simmons, C. J.
Wilson, J. (Oldham)


Muff, G.
Sinclair, Sir A. (Caithness)
Wilson, R. J. (Jarrow)


Muggeridge, H. T.
Sinkinson, George
Winterton, G. E. (Leicester, Loughb'gh)


Murnin, Hugh
Sitch, Charles H.
Wise, E. F.


Nathan, Major H. L.
Smith, Ben (Bermondsey, Rotherhithe)
Wood, Major McKenzie (Banff)


Naylor, T. E.
Smith, Frank (Nuneaton)
Young, R. S. (Islington, North)


Oldfield, J. R.
Smith, Rennie (Penistone)



Oliver, P. M. (Man., Blackley)
Smith, Tom (Pontefract)
TELLERS FOR THE AYES.—


Palin, John Henry.
Smith, W. R. (Norwich)
Mr. Allen Parkinson and Mr. T.


Paling, Wilfrid
Snell, Harry
Henderson.


Palmer, E. T.
Snowden, Rt. Hon. Philip



NOES.


Acland-Troyte, Lieut.-Colonel
Elliot, Major Walter E.
Mitchell-Thomson, Rt. Hon. Sir W.


Albery, Irving James
Falle, Sir Bertram G.
Monsell, Eyres, Com. Rt. Hon. Sir B.


Amery, Rt. Hon. Leopold C. M. S.
Ferguson, Sir John
Moore, Sir Newton J. (Richmond)


Atholl, Duchess of
Fielden, E. B.
Moore, Lieut.-Colonel T. C. R. (Ayr)


Baillie-Hamilton, Hon. Charles W.
Ford, Sir P. J.
Morrison, W. S. (Glos., Cirencester)


Baldwin, Rt. Hon. Stanley (Bewdley)
Forestier-Walker, Sir L.
Morrison-Bell, Sir Arthur Clive


Balfour, George (Hampstead)
Ganzoni, Sir John
Muirhead, A. J.


Balfour, Captain H. H. (I. of Thanet)
Gibson, C. G. (Pudsey & Otley)
O'Connor, T. J.


Bainiel, Lord
Glyn, Major R. G. C.
Oman, Sir Charles William C.


Beamish, Rear-Admiral T. P. H.
Gower, Sir Robert
O'Neill, Sir H.


Boothby, R. J. G.
Graham, Fergus (Cumberland, N.)
Peake, Capt. Osbert


Bourne, Captain Robert Croft
Greene, W. P. Crawford
Percy, Lord Eustace (Hastings)


Bowyer, Captain Sir George E. W.
Grenfell, Edward C. (City of London)
Peto, Sir Basil E. (Devon, Barnstaple)


Boyce, H. L.
Gretton, Colonel Rt. Hon. John
Ramsbotham, H.


Bracken, B.
Hacking, Rt. Hon. Douglas H.
Reid, David D. (County Down)


Braithwaite, Major A. N.
Hamilton, Sir George (Ilford)
Remer, John R.


Brass, Captain Sir William
Hartington, Marquess of
Rentoul, Sir Gervals S.


Buchan, John
Harvey, Major S. E. (Devon, Totnes)
Reynolds, Col. Sir James


Cadogan, Major Hon. Edward
Haslam, Henry C.
Roberts, Sir Samuel (Ecclesall)


Christie, J. A.
Henderson, Capt. R. R. (Oxf'd, Henley)
Rodd, Rt. Hon. Sir James Rennell


Churchill, Rt. Hon. Winston Spencer
Heneage, Lieut.-Colonel Arthur P.
Russell, Alexander West (Tynemouth)


Cockerill, Brig.-General Sir George
Herbert, Sir Dennis (Hertford)
Salmon, Major I.


Colman, N. C. D.
Hills, Major Rt. Hon. John Waller
Samuel, A. M. (Surrey, Farnham)


Colville, Major D. J.
Iveagh, Countess of
Samuel, Samuel (W'dsworth, Putney)


Crichton-Stuart, Lord C.
Kindersley, Major G. M.
Sandeman, Sir N. Stewart


Cranborne, Viscount
Knox, Sir Alfred
Savery, S. S.


Crookshank, Capt. H. C.
Lamb, Sir J. Q.
Skelton, A. N.


Cunliffe-Lister, Rt. Hon. Sir Philip
Lane Fox, Col. Rt. Hon. George R.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Dalkeith, Earl of
Law, Sir Alfred (Derby, High Peak)
Somerville, A. A. (Windsor)


Dalrymple-White, Lt.-Col. Sir Godfrey
Leigh, Sir John (Clapham)
Somerville, D. G. (Willesden, East)


Davidson, Rt. Hon. J. (Hertford)
Leighton, Major B. E. P.
Spender-Clay, Colonel H.


Davies, Dr. Vernon
Llewellin, Major J. J.
Steel-Maitland, Rt. Hon. Sir Arthur


Davies, Maj. Geo. F. (Somerset, Yeovil)
Locker-Lampson, Rt. Hon. Godfrey
Thomas, Major L. B. (King's Norton)


Davison, Sir W. H. (Kensington, S.)
McConnell, Sir Joseph
Thomson, Sir F.


Dawson, Sir Philip
Macquisten, F. A.
Tinne, J. A.


Dixon, Captain Rt. Hon. Herbert
Maitland, A. (Kent, Faversham)
Titchfield, Major the Marquess of


Dugdale, Capt. T. L.
Marjoribanks, E. C.
Train, J.


Eden, Captain Anthony
Mason, Colonel Glyn K.
Tryon, Rt, Hon. George Clement.


Edmondson, Major A. J.
Merriman, Sir F. Boyd
Vaughan-Morgan, Sir Kenyon




Wallace, Capt. D. E. (Hornsey)
Windsor-Clive, Lieut.-Colonel George
TELLERS FOR THE NOES.—


Ward, Lieut.-Col. Sir A. Lambert
Wolmer, Rt. Hon. Viscount
Sir George Penny and Sir Victor


Wells, Sydney R.
Womersley, W. J.
Warrender.


Williams, Charles (Devon, Torquay)
Worthington-Evans, Rt. Hon. Sir L.



Question put, and agreed to.

Motion made, and Question proposed, "That the Clause be added to the Bill."

Sir A. STEEL-MAITLAND: On a point of Order. Have you, Mr. Dunnico, in your discretion decided not to call the Amendment standing in my name—in line 61, at the end, to insert the words:
(5) This section shall apply only as respects Sur-tax charged for any year subsequent to 1929–30.

The DEPUTY-CHAIRMAN: That Amendment is not selected.

Mr. CHURCHILL: On a point of Order. I did not quite understand, Mr. Dunnico, your answer to my right hon. Friend. Do I understand that you have excluded this Amendment?

The DEPUTY-CHAIRMAN: I have said that the Amendment is not selected.

Mr. CHURCHILL: May I ask, then, what is the question which you are putting to the Committee?

The DEPUTY - CHAIRMAN: The Question which I put was, "That the Clause be added to the Bill."

Sir D. HERBERT: I cannot allow this Clause to be added to the Bill, without claiming the right to make some remarks about the rather remarkable history of these proposals, beginning with the original Clause 12 in the Finance Bill. When the Finance Bill was introduced, it included a Clause 12 which, in the opinion of many of us, was one of the worst of the many bad cases which have occurred of unintelligible, ineffective, and harmful Clauses introduced in the Finance Bills. When the Clause was reached in Committee, as a result of the extraordinary nature of that Clause, I asked the Chancellor of the Exchequer to postpone it in order that he might have the opportunity of bringing before the House a better form of Clause. He refused that request three times, until he was driven by the hard logic of facts to accept my proposal to postpone the Clause.
As I have some knowledge of insurance matters, I have taken a special interest in this Clause, and I think it only right that the Committee should take
some notice of what are the real facts of the case. What I am going to relate is no doubt known to the Chancellor himself, and therefore there is no need for him to listen to it if he does not wish to. But when the question was raised first, when this Clause was reached, and he was asked to postpone it, the Chancellor of the Exchequer referred to the fact that he had been in communication with the Life Offices Association. That was perfectly true. It was known to me before he made the announcement, and I too had been in communication with the Life Offices Association. The fact of the matter was that all the right hon. Gentleman's negotiations with the Life Offices Association, down to the day before this Clause was reached in Committee, had mainly resulted in the right hon. Gentleman refusing to accept the suggestions which were made to him or to comply with the requests of the Life Offices Association.
When the matter came before this House in Committee, as I have already stated, the right hon. Gentleman was driven by the logic of facts and by sound argument to postpone the Clause for further consideration, and it is interesting to note what happened after that. When that matter was being considered, and possibly with the sarcasm for which he is well known, the right hon. Gentleman said, in regard to the suggestion which I had made to him:
I am sure that my hon. and learned Friend the Attorney-General will be delighted to meet the hon. Member opposite
—that is, my humble self—
and to go over these points with him.
Now note the last words, typical of the right hon. Gentleman:
I am sure that in such a conversation as that the services of the hon. Member would be invaluable."—[OFFICIAL REPORT, 5th June, 1930; col. 2488, Vol. 239.]
I want no compliments from the Chancellor of the Exchequer of any party opposed to me. I am not hurt by any sarcasm of the right hon. Gentleman, if it was meant as such.

Mr. P. SNOWDEN: It was a perfectly honest remark.

Sir D. HERBERT: I am much obliged to the right hon. Gentleman. I have no need to say anything about sarcasm if he says it was honest. It brings me to the point which I want to bring before the Committee, and it is worthy of notice. I was in communication with the Life Offices Association, and I expected after that to be asked to consult with the right hon. Gentleman or his advisers about our objections and criticisms in regard to this Clause. It is not a question of myself. I care nothing about that, but no Member of this House has been consulted by the right hon. Gentleman since he first withdrew the Clause in regard to the new Clause which he was going to introduce. That was more than a mere matter of bad policy on the part of the right hon. Gentleman, for regard what follows. The day before this new Clause is to be considered, he puts it on the Order Paper, giving us slightly over 24 hours' notice to consider it. Then he comes and says that he expects to get the Clause through in a minimum of time, and without discussion as an agreed Clause. The Members opposite are anxious that the Labour party shall prove fit to govern. There is an opportunity for them to consider something as to how Parliamentary Government should be carried on. The right hon. Gentleman puts down the Clause a little more than 24 hours before he expects it to be discussed, and he expects it to be carried practically with no discussion. Why? Because he, as Chancellor, one of the leading Members of the Government in this country, and the head of the financial affairs of this country, in a matter which affects subjects of all kinds and all degrees, goes to one particular business association without consulting any of his critics who have forced him to withdraw his original proposal, and arranges with them a Clause in which he makes certain concessions, consulting no Member of the House, and no body of persons concerned on behalf of those with whom the life offices do their business. He comes down to this Committee and expects the Committee to sanction a bargain which he has made, and which is to bind people of this country generally, simply and solely because he has been driven by Members of this Committee to withdraw a proposal and has agreed a revised proposal with a
body which has no standing in the Government of this country.
I do not want it to be supposed that I have any complaint to make against the Life Offices Association. They have done their work well, as the Chancellor knows; but it is a poor example of how fit the Labour party is to govern when their Chancellor, known to be a person of no mean capacity, can insult the House of Commons—[HON. MEMBERS: "Oh!"] I say it advisedly, insult the House of Commons—by asking them to pass, practically without discussion, a Clause—substituted for one originally suggested by him but which he was forced to withdraw—because of an arrangement made with a body which, however estimable it may be has no position whatever in the legislative affairs of this country. I do not say that without evidence to support it.
The Clause is an improvement in many ways on the previous Clause, but it includes what every reasonable business man would regard as a slip. When an Amendment is moved to correct that apparent slip or error in drafting, arising on a point with which the Life Offices Association would have nothing to do, neither the right hon. Gentleman nor the Attorney-General is on the Treasury Bench, and we are left with the Financial Secretary, who as far as we can gather, has got instructions that the Clause is to be forced through without any Amendments whatever, on the ground that it has been agreed to with a body which has nothing to do with the proceedings of Parliament. If I have said anything that is not in accordance with the actual facts as to this Clause, and the right hon. Gentleman can saisfy me that I have done so, I will gladly withdraw.
To sum up my statement I say this: The right hon. Gentleman in the first place declined to accede to the request and the advice of the body best calculated to advise him in a matter of this kind, the Life Offices Association. He was forced in Committee to withdraw the proposals, and then he goes back to that body and gives way to their criticisms. Without giving sufficient notice to this House or consulting any Members of this House, the right hon. Gentleman puts down a Clause which has satisfied the criticisms of those people whom he con-
sulted outside this House, but which has never been discussed with those who criticise this Clause from a different angle, and he has declined to consider any Amendments, although they were Amendments which did not go to the root of this part of the Bill. The right hon. Gentleman has declined to consider those Amendments, and he has based his refusal to do so mainly on the ground that he had settled this Clause with a body which had nothing to do with the proceedings of Parliament. I want no compliments from the Chancellor of the Exchequer, and I care nothing for the opposite of compliments, but I have some regard for the forms of Parliamentary government. When one finds that an Amendment is moved in a case of this kind to which there is practically no answer given; when one sees that it was a perfectly reasonable Amendment which would not have upset the agreement which the right hon. Gentleman arrived at with the Life Offices Association, one can only come to the conclusion that the Chancellor of the Exchequer has adopted an attitude which is only an insult to the House of Commons. [Interruption.] I say that after very careful consideration and meaning it most thoroughly. It is not the first time that the right hon. Gentleman has made a slip. Last night the right hon. Gentleman made a statement which I have no doubt he was ashamed of when he came to think, and he was allowed to slide out of it by saying that it was said jocularly. When the right hon. Gentleman referred to people who had avoided taxation by certain methods which were perfectly legal as being in fact criminals, he was showing his attitude towards the House of Commons.

Mr. LOGAN: Is the hon. Member for Watford (Sir D. Herbert) in order in accusing the Chancellor of the Exchequer, when he makes a statement, of being incorrect?

Mr. CHURCHILL: On a point of Order, Mr. Dunnico. May I direct your attention to, and invite your Ruling regarding, the increasing practice of Members of the Labour party raising purely sham and fictitious points of Order in order to obtain the opportunity of wrongfully intruding upon the debate.

The DEPUTY - CHAIRMAN: Hon. Members and right hon. Members may leave the matter to me.

Mr. CHURCHILL: May we have your ruling upon the point of Order which has been raised by the hon. Gentleman?

The DEPUTY-CHAIRMAN: My Ruling is that points of Order, such as that raised by the right hon. Gentleman are for me to decide as circumstances suggest.

Mr. CHURCHILL: With very great respect, I did not desire to challenge in any way your right of decision, but to ask if you would be so kind as, perhaps, to let us know what it was.

The DEPUTY-CHAIRMAN: As the right hon. Gentleman knows, whenever any hon. Member of the House desires to use his privilege of raising a point of Order he is entitled to do so. The question as to whether it is an abuse is for the decision of the Chair to determine.

Sir PATRICK FORD: On a further point of Order. May I ask your Ruling with regard to the raising by the hon. Member opposite of a point of Order?

The DEPUTY-CHAIRMAN: I have given my Ruling.

Sir D. HERBERT: I was just going to sum up my conclusions with regard to the history of this Clause, and I am justified in saying that the party of which I am a humble Member has in this case proved, not only that an Opposition has a right to be heard, but that an Opposition may improve the legislation initiated even under the aegis of so great a person as the present Chancellor of the Exchequer. A proposal was brought before us which he was forced to withdraw——

The DEPUTY-CHAIRMAN: The hon. Member has occupied this Chair himself, and he knows perfectly well that repetition is not in order. This is the fifth or sixth time that he has repeated that statement.

Sir D. HERBERT: I apologise for having done that, and will endeavour not to do so again. One does occasionally, in discussing a subject of this kind, have to repeat a statement several times, in order that it may be taken notice of. As I have said,
I was just at the conclusion of what I was about to say when the last interruption was made. It invites me rather to advise the hon. Member who made that interruption to follow the advice given to a Member of his party by his own Leader only the other day. That advice was that Members of his party should learn the Rules of Procedure themselves before they attempt to dictate to others. I give that advice to the hon. Member opposite. Perhaps I might be allowed at last to complete the summing up of what I wanted to say in regard to this Clause. It was introduced for a purpose with which everybody in the House, I think I am right in saying, was in complete sympathy, but it was a hopeless, ineffective, useless and impossible Clause. It was withdrawn by its author, who was responsible for it. That was one good deed to which he was forced. He comes back with a Clause more or less dictated to him, which has been passed through Committee now without being improved in the way that it ought to have been if the right hon. Gentleman had been prepared to allow the matter to be properly considered in accordance with the ordinary Rules of Procedure in Committee of this House.

Mr. ERNEST BROWN: I cannot refrain from adding a word to the judicial summing up from the Bench above. In the course of it, the hon. Gentleman expressed a great deal of regard for the usages of the House. May I suggest that there are a great number of other Members who also have a regard for the usages of the House. As I understand it, one of the most valuable usages of the House is for Members to use debate in order to get the Government to understand that there are other points of view than their own, and thereby to get conclusions different from those first of all brought about in the drafting of a Measure. I cannot share his view with regard to the Chancellor of the Exchequer in this matter, because surely it is a very bad precedent for any Member to set, when a Member of the Government meets criticism frankly, fairly and freely, and at some cost of time and care, and produces another Clause which is universally admitted to be a better one than that which was introduced, to bring him into the dock
instead of offering a meed of thankfulness that criticism had been met.
In my understanding of the usages of the House there are political and business questions, and surely one of the best things we can get by way of debate is that, when business points are met, they should really be met, not in a political, but in a business manner, and in the case of this Clause they have undoubtedly been so met. [Interruption.] The hon. gentleman has had his opportunity and the usages of the House permit the Member following him to have his opportunity also. He complains that the Chancellor has consulted people outside and has not consulted those in the House. Surely his memory is very short. It is only 18 months ago that the then Opposition were complaining, on one of the most complex and technical measures ever brought before Parliament, when the then Minister of Health brought down Clause after Clause after consultation with the Association of Municipal Corporations and told the House to take it or leave it. We were not consulted as Members of the House. The hon. gentleman should not take himself quite so seriously. This House has a history not of one day but of a good many years, and all parties have had their share in making precedents in the usages of the House. He talks about playing a lone hand. If he would look at the number of Amendments in his own name on the Order Paper—it does not look as if he had consulted his colleagues about some of them—I think he would pray, not for a judicial mind but for a sense of humour.

Mr. MARJORIBANKS: I think the object of the Clause must meet with general approval and, in fact, many of the leading insurance companies have refused to undertake insurances made in order to avoid taxation. There is a real substantial point of criticism that I should like to make for the purpose of improving the Clause. The words "being an individual" in Subsection (2) obviously were put in advisedly. No one could say that this is a simple Clause. Everyone agrees that it is most complex and will be difficult for the courts to construe afterwards. If there were a loophole, everyone would agree that it is a great pity it was ever introduced.
I do not know whether the hon. Members opposite appreciate the meaning of the word "individual," and whether they are aware that it does not cover legally under the Income Tax Acts, the word "company." Therefore it will be possible for persons to transfer to a company their interest in a contract of insurance and the company apparently is to avoid any kind of liability under the Clause. It would seem that the whole of the discussions which we have indulged in during all these weary days about the evasion of taxes by companies have absolutely been in vain. It would still appear that the Chancellor of the Exchequer is providing another trap for himself in order to enable individuals to transfer to companies their interest in this kind of contract of insurance and thereby drive a coach and four through this very complicated Clause. I think everybody will agree that, if that were so, it would be a tremendous pity that such a Clause should have been introduced. I cannot help feeling that there must be an answer to this very simple contention. It is beyond question that the word "individual" does not cover a company, and, therefore, I would like to ask the Attorney-General and the Chancellor of the Exchequer to meet my point.
I had intended originally to draft an amendment upon this question and to suggest the omission of the words "being an individual," but I found that it would so vitally affect every single provision of this very complicated Clause that a proposal of the kind would have been futile and the whole of the Clause would have had to be redrafted again and submitted to the House. I think that the Attorney-General ought to agree that this is a point of substance, and that the Chancellor of the Exchequer ought to be unwilling to prepare another trap for himself and complications for his successor. I would ask the Chancellor of the Exchequer to consider, before the Report stage is reached, whether he cannot improve his Clause by bringing companies under it?

Mr. CHURCHILL: The Chancellor of the Exchequer is to be congratulated upon the arrangement which has been made that this debate on Clause 12 should come to a conclusion at 12 o'clock. I rise at this stage only for the purpose
of saying that it is not our intention to divide against the Clause in its resuscitated and novel form. Although we consider that it still contains many objections, we must admit that it has been so completely remodelled that it does not call from us at this stage a manifestation in the Division Lobby. But let the Chancellor of the Exchequer not imagine that he is entitled to receive any bouquets for this legislation. On the contrary, he owes it to the House of Commons, and to no one more than the hon. Member for Watford (Sir D. Herbert), that he has been rescued from the fate which lay before him, from the pitfalls into all his untutored steps were remorselessly leading him. What a discreditable transaction is the history of this Clause! Here is the Chancellor of the Exchequer using all the force and power of his office upon his opponents, with the utmost vigour. Having had all the winter to consider these matters, having all the brilliant experts of the Treasury at his disposal, having also at his disposal, if he had only asked for it, all the advice of the great commercial companies and interests who are involved in this aspect of legislation, with mature deliberation he produced his plan he produces it in the Finance Bill, it is printed and circulated, and the House goes into Committee upon that carefully considered plan.
The briefest examination shows that it is vitiated at every point, that it is contrary to reason and logic and good sense, that it would not work and that it would involve immense injury to our affairs. The right hon. Gentleman has to go off tardily and, after the due hour has passed, do the work which he should have done earlier. He has to go and consult those very vested interests which his party exists to insult and undermine. He has to go and meet them in humble parley and, line by line and word by word, redraft and recast his legislation, until the final form of his Clause is utterly unrecognisable from that in which he cast it with the aid of his officials. After he has done that, after he has gone to Canossa or has sat shivering in the courtyard—or would have sat shivering but for the season of the year—of the great life assurance companies, he comes down to the House and tries to convert his humiliation into a positive wean of victory. He
tells us that because he has now, at last, made peace with the great vested interests, therefore the alliance of the Socialist Government with great vested interests is complete and that the House of Commons need not concern itself further in the process. In his drafting and redrafting of this Clause, the right hon. Gentleman has exhibited every vice which can be scarified in our legislation. He has shown carelessness in preparation, arrogance in the advancing of his Measure, swift and weak retirement, readiness to arrive at accommodations with those he had been previously prepared to scout and finally a renewal of the original arrogance.
What do we see? His original Clause, a misbegotten abortion, has been withdrawn, and now we are invited to witness the rising from its ashes of a phœnix, assisted by the life insurance companies. This is presented to Parliament as a specimen or the efficiency of Labour legislation in regard to complicated commercial and financial matters. My hon. Friend was absolutely justified in the careful manner in which he exposed the shortcomings of the Chancellor of the Exchequer to the Committee, and my hon. Friend below the Gangway, whose robust interventions in our debates always excite our pleasure, even when they do not command our agreement, who told us off so sharply and who is always ready to tell us off as sharply as if we were a squad of infantry, was not in some at least of the closing passages of his remarks sufficiently recognisant of the services which my hon. Friend the Member for Watford (Sir D. Herbert) rendered to the Committee.
Although we have made our protest against the careless, slipshod, slovenly, slapdash manner in which the Chancellor of the Exchequer has commended his proposals to the Committee, we do not intend on this occasion to carry our proposal into the Division Lobby. We must admit that the skilful advice of the great interests concerned, elaborated as it has been by a Committee of the House of Commons, which has not shirked its duties, has enabled the country to escape most mischievous proposals, which, if we had not banded ourselves together to effective resistance, would at this moment be passing smoothly and remorselessly to their place in the permanent legisla-
tion of the country. It is worth while reflecting on the risks we run and the jeopardy we stand in every hour. If a number of private Members in this Committee had not scorned delights and lived laborious days, if they had not sacrificed their time and strength, and endangered their health and confronted the Socialist Chancellor of the Exchequer with a firm resistance, with a hedge of fixed bayonets, this Clause in its original mischievous and atrocious form would already be sailing along on its way to the Statute Book. We have done our duty, and we have had one of the rewards, one of those rare and refreshing fruits that fall from time to time from the tree of Fortune to those who have laboured long. Encouraged by the success the Committee has had in the remodelling of this Clause, we shall devote our energies with even greater force to the further stages of the class-prejudiced, spiteful, fruitless and injurious Measure, of which this Clause is a typical example.

Mr. P. SNOWDEN: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
The patent exhibition of buffoonery, which has just disgraced this Committee—[Interruption.]—is a fitting end to the proceedings of this afternoon. It is a fitting end to the proceedings. I believe that many Members opposite do not by any means uphold it. Those who have been responsible for the breaking of understandings and for dishonouring agreements, will go home after the proceedings proud of the part that they have taken. [Interruption.]

The DEPUTY-CHAIRMAN: I heard some hon. Member say "Liar." That word must be withdrawn at once.

Mr. CHURCHILL: I was sitting near the hon. Member, and I do not think he used the expression.

HON. MEMBERS: Yes, he did!

The DEPUTY-CHAIRMAN: The word "Liar" came clearly and distinctly to my ears, and the hon. Member must withdraw the expression at once.

Mr. BAILLIE - HAMILTON: I certainly withdraw the remark, but I do not remember that I said it.

An HON. MEMBER: Then why withdraw it?

Mr. SNOWDEN: I was saying, when that interruption took place, that I hope those Members opposite who have been responsible for the way in which the proceedings have been conducted this afternoon, will be proud of their achievement.

Sir L. WORTHINGTON-EVANS: The right hon. Gentleman has accused the Opposition of having broken agreements. That is an utterly unjustifiable accusation. The only agreement that was made was made yesterday, with one slight variation, in the course of the afternoon, that the right hon. Gentleman should be assisted by the Opposition to get the Clause we were on yesterday, and Clause 12. The agreement yesterday afternoon, so far as it was an agreement, was that the Opposition should help him to do so. The only variation was that about six o'clock this afternoon I intervened to point out that it would be highly desirable that longer time should be given to the discussion on Clause 33 and that we ought, if we could, to get it done about 7.30. That was assented to by the Chancellor of the Exchequer, and completely and absolutely honoured by the Opposition. The other part was that he should get Clause 12 by 12 o'clock.
He has got Clause 12, and he has no more right to accuse the Opposition of having broken their undertaking than he had the other day to accuse them of tomfoolery. It meant that he had to withdraw the Clause, eat his words, and reprint the Clause so that the Committee could discuss it. Now he accuses us in a most disorderly way of "buffoonery." I am going to ask the Deputy-Chairman in a moment whether that is a disorderly word. There has been no buffoonery, and the Chancellor ought to be ashamed of attempting to use his position to bully the Committee.

Mr. P. SNOWDEN: Every word that I said in regard to the breaking of the agreement is absolutely true.

HON. MEMBERS: Nonsense!

Sir L. WORTHINGTON - EVANS: Absolutely untrue!

An HON. MEMBER: We will not have any more agreements!

12. m.

Mr. SNOWDEN: The right hon. Gentleman gave an undertaking last night that the debate on Clauses 29 to 33 would be completed about 6 o'clock this evening, but when 6 o'clock arrived we were still discussing Clause 32. Then I generously released the party opposite from that undertaking, and later in the evening, indeed twice in the evening, the right hon. Gentleman intimated that they desired to accelerate business and that the debate on those Clauses would be speedily concluded and that we should get on to Clause 12 and possibly some of the other new Clauses before the Committee rose.

Mr. CHURCHILL: I made no arrangement except that which is recorded in the "OFFICIAL REPORT," which can be examined. As to the arrangements made to vary the agreement so that the discussion on the group of Clauses ending with Clause 33 should be brought to a conclusion between six and seven this evening, I was not concerned with it, but I understood from the Chancellor of the Exchequer that he gave a release from the undertaking, and he cannot, therefore, go back upon it. Never in any circumstances have we made any agreement that anything more than Clause 12 should be got to-night. On the contrary, we expressed grave doubts as to whether that Clause could be dealt with by midnight, and it was only in the event of the right hon. Gentleman withdrawing the original Clause 12 that we made any suggestion of agreement. As far as I am aware, the right hon. Gentleman has not the slightest ground of complaint when he goes home to-night, not only with the group of Clauses up to 33, but also with his new Clause 12. He has got all that was ever suggested or agreed to by us in any of the discussions which happily have taken place in the full light of day across the floor of the Committee. It is quite true that if the right hon. Gentleman had been willing to give us some indication of his intentions with regard to the future Committee proceedings on the Bill, I held out a hope that we might, by sacrificing many things which we consider are essential, have accelerated the progress of business. He refused. I asked him at 6 o'clock, and at 7 o'clock, and at a quarter past ten to give the Committee some guidance as to the future conduct of business. He declined; and,
that being the case, he has not the slightest ground for complaint. He makes these complaints when he is angry, but the point is whether he makes them when they are true. He knows very well that we did not agree that he should have more than Clause 12 by midnight to-night unless by indicating the future course of the Bill he rendered the conduct of business easier. This is the statement from yesterday's OFFICIAL REPORT:
If the Opposition are willing to agree to the suggestion that we should get through these Clauses and also the new Clause 12 by midnight to-morrow, I would be satisfied."—[OFFICIAL REPORT, 2nd July, 1930; col. 2047; Vol. 240.]
Really, I make great allowances for the Chancellor. He has a great burden upon him, and I think he bears it with a great deal of courage. From many quarters foes advance upon him, and he is abused for much that he can control and for more that he cannot control. Therefore, I am not one of those who would hound him down, but I put it to the Committee, in the broad fair play of the House of Commons, whether he has not shown the results of the pressure that is upon him when he charges us with a dishonourable breach of faith and with failing to keep Parliamentary agreements, when those words which I have just read out, placed in my hands by a colleague, can be already nakedly placed before him across the Floor.

Mr. P. SNOWDEN: The words which the right hon. Gentleman has read have no bearing at all on this question, and the OFFICIAL REPORT will prove that tomorrow. I remember saying, I think it was at 10 o'clock this evening, that we must make an inroad into the earlier of the new Clauses on the Paper, and that, I am sure, is within the recollection of the Committee. I know quite well what the understanding was.

Mr. CHURCHILL: Might I ask one question? What concession did the right hon. Gentleman make? An understanding cannot be unilateral. It is quite true that I offered that we would endeavour to accelerate business if the Chancellor outlined subsequently the future progress of this Bill, but he refused to do so, and he has no right to expect from us our share when he has utterly refused to make any contribution whatever.

Sir AUSTEN CHAMBERLAIN: I was not present during the discussion, and I do not propose to add anything to what might right hon. Friends have said as to exactly what passed. But this is not the first time that the Chancellor of the Exchequer has flung across the House a charge against the party sitting on these benches of breaking a Parliamentary agreement. I have sat in many Parliaments, in many Governments, and I have been a party, active or passive, to many agreements. I have sometimes known a misunderstanding arise, but I say without hesitation that I have never known any party, however heated the Parliamentary atmosphere, break an agreement so arrived at; and I would venture before we leave this matter to-night, to ask the right hon. Gentleman to re-consider his attitude on these matters. Granted that he understood one thing and hon. Gentlemen on this side of the House understood another—that is possible; it is very unfortunate but still possible—but the business of this House cannot be conducted with satisfaction to ourselves or with contentment to the nation if charges of ill-faith are to be flung across this Table such as, in the hottest times of Parliamentary strife, have never been heard from the Leader of the House before.
On the last occasion my right hon. Friend the Chief Whip of our party made his explanation. The right hon. Gentleman the Chief Whip of the party opposite made his, and I think all of us recognised that, though he did not in any way withdraw from his understanding, the incident would have been closed and would have passed from our memory without bitterness if the Chancellor of the Exchequer could have found it in his heart to say exactly what the Chief Whip had said. The Chancellor of the Exchequer refused, and to-night he renews the charge. You cannot do Government business on those terms. This House cannot work if those charges are to be flung across the Floor in this way, and we all of us, who have had experience, know that we do not break Parliamentary bargains, that it is possible that we may misunderstand, that we may in a moment of passion utter words of that kind, but that it is our duty and that it is more consonant with the truth to admit that we spoke in heat and to
accept the explanation which honourable men can offer and honourable men can receive. I do not ask for more from the Chancellor of the Exchequer to-night. I do not think he is in a mood to consider these things calmly or fairly—

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Sanders): That is a nice way of putting it!

Sir A. CHAMBERLAIN: I withdraw that. If to the Chancellor of the Exchequer or to any one of his friends I have used a phrase that sounded offensive, I withdraw it. I think that in the heat of what has passed the Chancellor can hardly perhaps see things in the full light of what has occurred. But I ask him to reconsider it, before the House resumes to-morrow, and to see if he cannot withdraw a charge which
should never have been made, which will make any Parliamentary agreements with him impossible, and which must prolong unnecessarily the discussion of any business which he conducts.

Committee accordingly report Progress; to sit again upon Monday next, 7th July.

The remaining Orders were read, and postponed.

It being after half-past Eleven of the Clock upon Thursday evening, Mr. SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at a Quarter after Twelve o'Clock.